After these steps have been carried out, the company is formally dissolved.
The law classifies liquidations into two types: voluntary (which is by a shareholders' resolution) or compulsory (by a court order).
The liquidator represents the interests of all creditors.
The liquidator supervises the liquidation, which involves collecting and realising the company's assets (turning them into cash), discharging the company's liabilities, and distributing any funds left over among the shareholders in accordance with the company's constitution (or the COMPANIES ACT 1993 if there is no constitution).
When a company is being liquidated because it is insolvent, the liquidator has a duty to all the company’s creditors.Vested assets in the form of stocks, government bonds, and mutual funds are acceptable sources of funds for the down payment, closing costs, and reserves provided their value can be verified.The lender must verify the borrower’s ownership of the account or asset.The company was “administratively dissolved” some time after, for example, effective January 25, 2008, due to its failure to timely pay state franchise taxes.Company management, however, was blissfully unaware of this development and continued to file the business’s federal corporate income tax return and pay all federal income taxes.