What is "liquidation"?

Liquidation/liquidation is a legal procedure, in which the production and operation of the company stop, all assets (including machinery, factories, offices and property used to make money) are sold in a short time, converted into cash, and then the outstanding debts are repaid (distributed) in turn, and then the company is dissolved according to legal procedures.

Chinese name? Liquidation is a legal procedure.

Interpretation? The production and operation of the company stopped and the company was dissolved.

Liquidation can be simply divided into two types.

Basic introduction

When the company has problems or debts. Or shareholder disputes. Or mismanagement, etc. Naturally, there is the possibility of liquidation. After the company's assets are liquidated and distributed to creditors and shareholders, the liquidation is over. Limited companies and unlimited companies have different liquidation and handling methods. Generally speaking, since an unlimited company is not an unincorporated organization and operates in the form of sole proprietorship or partnership, it is only necessary to notify the tax bureau to stop operating, keep accounts for the company and stop issuing business registration certificates. The procedure is much simpler than limited company. At the same time, because creditors can directly go to the court to recover debts from the person in charge of the unlimited company, and even ask the parties to declare bankruptcy for repayment, the unlimited company will only take the initiative to liquidate or stop operating, but will not. After deciding to liquidate or suspend business, all assets of the company will be sold. If it is a partnership operator, the assets shall be distributed according to the partnership agreement concluded when the company was established. In fact, it is often because shareholders can't continue to cooperate that they decide to go into liquidation, or they can hire an accountant or ask the chairman of the Institute of Accountants to designate a neutral accountant when they don't know each other. If it still cannot be settled smoothly, they can go to court and the court will appoint an intermediary to handle the liquidation. However, whether the liquidator is appointed by himself or by the court, the expenses will be deducted from the company's assets first. If the unlimited company is sold to others, it is only necessary for shareholders and buyers to reach an agreement to allocate the proceeds from the sale of the company to the company's assets for distribution. However, it should be noted that if the tax bureau thinks that the selling price is lower than the market price, the tax bureau will make another assessment.

Basic classification

Liquidation can be simply divided into two types, including:

Voluntary liquidation: Partners, shareholders and other company members of a limited company think that the original mission of the company has been completed, or the company has no need to continue to operate, and take the initiative to liquidate, sell assets back to cash, distribute them to creditors and shareholders, and terminate its corporate status. This kind of liquidation is not necessarily "insolvent".

Compulsory liquidation: because the company's funds can't cover its liabilities, the creditors can recover through civil law, and finally the court issues a compulsory liquidation order.

Automatic cleaning

Automatic liquidation can be divided into: automatic liquidation of company members and automatic liquidation of creditors.

Voluntary liquidation of company members

When the company members decide to carry out voluntary liquidation and dissolve the company, voluntary liquidation will be carried out. If the company members decide to liquidate the company, the company will usually stop operating and voluntary liquidation will begin. If the company is able to repay its debts, and the company members can provide legal statements to prove the company's solvency, the liquidation will be regarded as voluntary liquidation by the company members.

In the above-mentioned voluntary liquidation case, the meeting decided to appoint a liquidator for liquidation. Otherwise, the liquidation case will be regarded as creditors' voluntary liquidation and a creditors' meeting will be held. At this time, the directors of the company must report the affairs of the company. If creditors voluntarily liquidate, a company liquidation review committee will also be established and its members will be appointed.

Even after the voluntary winding-up of the company, the court can still issue a compulsory winding-up order, but the contributories applying for winding-up may need to pay attention to the fact that voluntary winding-up may harm the interests of other contributories.

Voluntary liquidation of creditors

The difference between creditors' voluntary liquidation and shareholders' voluntary liquidation lies in whether assets and debts can offset each other. Insolvency belongs to the former, and insolvency belongs to the latter. However, whether it is the former or the latter, shareholders hold a special meeting to pass the liquidation resolution, and then hold a creditors' meeting. At that time, all creditors such as banks and suppliers must also participate. If all creditors agree to liquidate the company, the conditions of voluntary liquidation can be met. After the liquidation decision, the liquidator must be appointed to be responsible for all liquidation affairs. If the company is insolvent, the liquidator will be recommended by shareholders and the creditor will make the final decision. However, if assets exceed liabilities, they will be directly designated by shareholders.

compulsory liquidation

If the company has too much debt, its creditors and/or company members may apply to the court for liquidation.

After the winding-up petition is filed, the court will hear the winding-up petition, and finally the court will issue a compulsory winding-up order to wind up the company. Compulsory liquidation is the liquidation caused by the debtor's recourse to the court. When the creditor gets the value order, the company will receive a formal notice to pay off the debt within 2 1 day. If the company cannot repay, the creditor may apply to the court for compulsory liquidation. If there is no objection to the company's application for liquidation when it formally goes to court, the court will appoint the Official Receiver as liquidator. If there are some complicated liquidation matters, you can also hire an accountant to handle them. In addition, listed companies will be subject to more restrictions than private companies, because they are regulated by both the Stock Exchange and the Securities and Futures Commission. If the company is applied for liquidation, it will have to stop its operation to prevent the stock price from fluctuating too much.

Provisional liquidator

If the liquidation applicant believes that the company's assets are in danger after submitting the liquidation application, the applicant can apply to the court through his lawyer to appoint a professional such as an accountant or lawyer as a temporary liquidator. After the court issues a liquidation order, the provisional liquidator will collect and sell all the assets of the liquidation company, so that the creditors can get the maximum debt repayment. In addition, the provisional liquidator will convene and preside over the first meeting of creditors and contributories to discuss the appointment of a formal liquidator and the establishment of an inspection committee (if any) after the court issues a liquidation order.

Duties of liquidators

Whether it is a limited company or an unlimited company, the liquidator (middleman) will also take over and control all assets of the company, including the recovery and repayment of debts, and distribute them after the assets are sorted out. In the case of an unlimited company, all assets are owned by shareholders; In the case of a limited company, assets are distributed between creditors and shareholders. However, the liquidator will pay the debts first, pay the liquidator's fees first, then repay the debts to the priority creditors, namely employees and the government, then unsecured creditors, and finally distribute them to shareholders in proportion. It should be noted that one of the creditors is a secured creditor and can immediately sell the collateral to pay off the debt after the liquidation begins. If there is a balance after deducting debts, it must be handed over to the liquidator for distribution to other creditors. It is worth mentioning that even if a lawsuit is filed, if the person in charge of the company can't be contacted to find out the company's accounts and assets, the debt can't be recovered, but the expenses of the liquidator and the expenses of the lawsuit are still borne by the applicant. The cost is generally around 50,000 to 60,000, so there is a risk that the loss will outweigh the gain. Therefore, unless the amount involved is large, ordinary creditors will not easily apply to the court for liquidation of the company. When the company is wound up, the liquidator will sell all assets and then give priority to paying off debts. Creditor's rights are mainly divided into secured creditor's rights and unsecured creditor's rights. For example, Lehman borrowed money from you with its own shares as collateral, such as Greentown China (3900). You can get back the shares immediately after the liquidation begins, and use the proceeds from the sale to pay off the debts. If there is any balance, it shall be returned to the liquidator and become the company's assets, which shall be distributed to other creditors in sequence; If the amount of collateral sold is insufficient, you will be included in the list of unsecured claims.

In the order of repayment, in addition to the remuneration of liquidators, employees and the government, banks also have a high status. You may ask, why can banks get money earlier than other creditors? Legal interpretation is to protect the health of the financial system and the public interest. Because of this, banks enjoy higher priority in the list of claims. After that, it's the turn of the general unsecured creditors. Finally, there are shareholders, that is, investors who hold stocks. This time, a well-known investment bank like Lehman had to choose liquidation, and we can infer that it was seriously insolvent. In this case, the chances that unsecured creditors can successfully claim compensation are very slim.

Dissolution of post

When all the assets of the company have been realized and the affairs of the company have been completed, the liquidator shall hold the last meeting of creditors/company members to discuss his intention to apply to the court to dismiss him from his position as liquidator, and notify the relevant government departments/institutions to register the company. After all the affairs are completed, the company concerned will be dissolved.

capital settlement

Open-end funds generally do not stipulate their own duration, but in some cases, open-end funds can make liquidation decisions and end their existence through the liquidation and distribution of fund assets.

Open-end funds need liquidation.

(1) According to the provisions of the Fund Contract or the Articles of Association: if there are provisions in Taiwan Province Province, the reasons for the termination of securities investment in trust deed shall be in accordance with the provisions of securities investment in trust deed, unless otherwise stipulated by laws and regulations.

(2) Resolutions passed by the holders' meeting or shareholders' meeting: If there are provisions in the UK, open-end funds can be liquidated by special resolutions. The liquidation of open-end funds in Hong Kong also needs the resolution of the holders' meeting.

(3) The situation in which the competent authority revokes the open-end fund license:

① According to the written application of the fund manager. According to British regulations, the authorized directors of fund managers apply to the Financial Services Authority (FSA) for cancellation of authorization, and with the consent of FSA, open-end funds can be liquidated.

② Inappropriate establishment or becoming inappropriate. According to Dutch regulations, the Ministry of Finance may revoke the license if it finds that the original application materials are wrong or incomplete or the application for establishment under the same conditions will be rejected due to changes in circumstances.

③ Fund managers and custodians no longer meet the statutory requirements. South Korea stipulates that trust deed can be abolished when the entrusting club (fund manager) is disqualified or dissolved, but it has not been handed over to the Minister of Finance.

④ Based on public welfare or beneficiary's interests. It is stipulated in Taiwan Province that it is appropriate to terminate the securities investment in trust deed based on public interests or the interests of beneficiaries, and the China Securities Regulatory Commission may order the termination.

Capital settlement's conditions

Under any of the following circumstances, the Fund will be terminated after being approved by the China Securities Regulatory Commission:

1. When the fund contract expires, it will not be extended;

2. During the duration, the number of fund holders is less than 65,438+000 for 60 consecutive working days, or the net asset value of the fund is less than 50 million yuan for 60 consecutive working days, and the fund manager announces the termination of the fund;

3. The fund holders' meeting voted to terminate the fund;

4. Due to major violations of laws and regulations, the Fund was ordered to terminate by the China Securities Regulatory Commission;

5. The fund manager cannot continue to be the fund manager due to dissolution, bankruptcy, cancellation and other reasons, and there is no other suitable fund management institution to undertake its rights and obligations within 6 months;

6. The fund custodian cannot continue to serve as the custodian of the fund due to dissolution, bankruptcy, cancellation and other reasons, and there is no other suitable fund custodian to undertake its rights and obligations within 6 months;

7. The merger and cancellation of funds due to the change of investment direction;

8. Other circumstances stipulated by laws and regulations or permitted by China Securities Regulatory Commission;

When the fund is terminated, it shall be liquidated in accordance with laws and regulations and the relevant provisions of the Fund Contract.

Stock liquidation

Bankers have seats in the stock exchange and need to sign an agreement and pay a certain deposit. If the banker's improper operation leads to the exposure of the account and serious losses, the stock exchange has the right to liquidate the banker, which is generally called liquidation.

Help the liquidation of the market

Liquidation of listed companies is an inevitable trend for China stock market to mature. First, technological innovation is used to deal with the problems left over from history, and then bankruptcy protection law is used to settle them.

In the process of liquidation, a listed company that is insolvent and has lost its operating conditions will be replaced by an excellent company through technological innovation. The provincial standard operation steering group at the place of registration takes the lead in liquidating the original listed company. Case: 50,000,000 outstanding shares, with a market value of 0.4 yuan before suspension, were announced. Within one month, the outstanding shares of the original listed company will be reduced from 5 shares to 1 share (i.e. 2 yuan 1 share) to purchase the existing shares of the new company or sell the old shares for cash. Theoretically, the full circulation risk management fund repurchases 50 million shares of the original listed company, and 20 million yuan buys 65,438+1share shares of the new listed company with 0 yuan. In fact, the original tradable shareholders hold100,000 shares, and the fully-circulated risk management fund holds100,000 shares. The new company takes 20 million yuan as the purchase price. After solving the two major problems of tradable shareholders and employee placement, the bankruptcy procedure of the old company should be satisfactorily solved. After a year's operation in the third board market, newly listed companies can issue 30 million shares on the Stock Exchange and go public after being recommended by the standardized operation team and reported to the CSRC.