Types of Liquidation of Companies in the UAE:

Establishing a company in the UAE is great and many businessmen want it because of its advantages, but there are some people who find it difficult to keep things going well and want them to liquidate their companies, during the next paragraph continue to know the types of liquidation of companies.

Voluntary liquidation of members:

Voluntary liquidation of members allows directors and shareholders to close a limited company with the aim of extracting cash or assets in an effective tax manner.

It is a liquidation procedure designed as a way for affluent companies to officially close their business when the company reaches the end of its useful life.

This often happens either because of retirement or simply because they move to a new project and want to access restricted profits at work.

The company must be solvent What this means is that the company must be able to reimburse all its creditors within a period of 12 months or have already paid all creditors.

The insolvency practitioner cannot close an insolvent company through the use of the voluntary liquidation of members.

Insolvent liquidation (voluntary liquidation of creditors):

One type of corporate liquidation is the voluntary liquidation of creditors and is a solution for a limited company struggling to stay afloat.

When it becomes clear that the company in question is insolvent and the chances of influencing a successful transformation are slim.

Voluntary liquidation of creditors is often triggered due to the decline in the company's cash flow.

Managers should take early advice if they are facing issues such as losing a client or a key contract, tax arrears or the inability to repay your backward loan rebound all the typical warning signs of a company in financial distress.

If directors and shareholders wish to liquidate the company and proceed with other matters while writing off the company's unsecured debts – voluntary liquidation of creditors will be the appropriate solution for selection.

This voluntary filtering solution is usually chosen as a last resort after considering all the other options.

Compulsory liquidation:

In some cases of corporate liquidation types the company is liquidated by court order and not voluntarily by its directors.

A creditor usually initiates forced liquidation through the use of a liquidation petition.

The intention to liquidate a limited company with a liquidation petition is generally to force the limited company to close.

The creditor is usually able to get some return because the company may not have been paying the bills on time or in a similar situation like this.