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basic of liquidation, Creditors and remuneration

1 What is liquidation ?

     The liquidation is to declare that the company will be closed for some reason ,This may be the last period of the artificial man (company) ,This notice should be communicated to all those who work in the company and to all those who are in relate with the company.

2 What is winding up ?

     A document containing details of the legal steps to be taken to dissolve a company is called a winding up document ,This is the beginning stage of the liquidation ,

3 What is dissolved ?

     After completing all the steps mentioned in the winding up document the name of the company is remove from the register. This is the dissolved of company

4 Why liquidation of company ? ?

     Members will close the company if there is continued loss or the court will close the company if it is against the law

5 Creditors ?

     Money to be paid by the company (Credit purchases and pending payment ) and The company borrowed (loan on buliding) They are called creditors

6 Secured creditors ?

     If the money borrowed by the company (loans related to fixed assets) and the money to be paid by the company ( Bills payable related to stock) is related to the assets it is called a secured creditor

7 Unsecured creditors ?

     If the expenses due in the previous years are not paid it will be called a unsecured creditors (outstanding expenses ,outstanding payment)

8 Preference creditors ?

     Creditors are classified into two types, secured creditors and unsecured creditors but When a company liquidation, half of the unsecured creditors is taken separately it is called preferences creditors


Example of Legal procedure for Preferential creditors


6 month salary or $800 paid to preferential creditors |preferancial creditors $800


previous 12 months tax paid to preferancial creditors |preferancial creditors $600

9 Liqudater ?

    The person appointed to dissolve the company, Liquidator Appointment Winding Up Second stage An liquidator may be appointed if there is no appeal to the court to stop the dissolution process

10 Liquidator work ?


First you need to prepare the balance sheet( 7 month or 11 month )

then next step is pledged the asset document recovery (surplus document)

next go to payment side ,You can find out more about this in the winding up chapter

11 Remuneration ?

     liqudatore do the work will pay the money that money mostly he is like % of payment ,that is remuneration

12 Remuneration pay to asset realised ?

     mostly liqudators expactiong asset realised sume of %

remuneration $1900

13 Remuneration pay to preferential creditors ?

     remuneration paid to preferential creditors before

remuneration $200

14 Remuneration pay to unsecured creditors ?

     remunaration paid to unsecured creditors (surplus)

remuneration $500 (5000* 10/100 = 500)

     remuneration paid to unsecured creditors (deficit)

The Company promises to pay a certain percentage to the Liquidator, and if the company is a deficit, it will have to repay the percentage of the amount paid to the Liquidator.


The unsecured creditors has $ 5000 to pay (unsecured creditors $7000) 10% remuneration paid to Liquidator (12 members equal ratio )

calculate unsecured creditors payment and liquidator payment

calculate remuneration

next calculet : The company is in deficit so unsecured creditors are paid 10%

member sacrifice ratio to unsecured creditors 12 *10 /100 = 1.2 & each member sacrifice 1 * 10/ 100 = .1

simple calculator

Total unsecured creditors paid 45.5

example 2

The unsecured creditors has $ 7000 to pay (unsecured creditors $10000) 10% remuneration paid to unsecured creditors (5 mebers (2 authority (ratio 3),3 worker (ration 2) )

Calculate unsecured creditors Creditors Payment And Liquidator Payment

Calculate Remuneration

Next Calculet : The Company Is In Deficit So Unsecured Creditors Are Paid 10%

Member Sacrifice Ratio To Unsecured Creditors 12 *10 /100 = 1.2 + total ratio


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