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What is Company Liquidation?

There are various types of company liquidation in Dubai, including voluntary and involuntary liquidation. It typically occurs when a business is unable to pay its creditors. In such situations, the company’s assets are converted to cash and used to pay off its debts. Creditors can include lending institutions and banks that provided the business with loans.

There are a number of advantages to company liquidation
  • It relieves the company of its debts and financial obligations. Often, liquidating the business is a last resort to avoid severe legal consequences. By liquidating the business, the proprietor can eliminate the burden of debts and avoid possible legal action.
  • liquidation relieves pressure and intimidation from creditors.
There are a number of advantages to company liquidation
  • Additional payments may need to be made even after the liquidation is complete.
  • Liquidating a business requires selling off its basic materials, machinery, and other assets, resulting in a substantial financial loss.
  • The liquidation of a business can also be a protracted process, lasting between 6 and 12 months. This lengthy procedure can result in ongoing stress and uncertainty for the proprietors.
various varieties of company liquidation
compulsory liquidation

When a company is forced to liquidate because it cannot pay its debts, this is known as compulsory liquidation. Lenders present evidence to the court demonstrating the insolvency of the company and requesting its liquidation.

voluntary liquidation

In voluntary liquidation, the company’s directors make the decision to dissolve the organization when it is no longer profitable or serves a purpose.

Company liquidation in Dubai is common when a business is unable to generate enough profit. Typically, legal actions are brought against the company itself as opposed to individual members. The legal processes are the responsibility and accountability of the company’s regulatory bodies.

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