Chapter 18 - Liquidation and Dissolution

Question 1

What are the types of liquidation?

Answer 1

Compulsory (court-ordered) and voluntary (members or creditors).

Question 2

What is the role of the liquidator?

Answer 2

To take control of the company during liquidation, collect and sell it’s assets, pay creditors in the correct order, investigate company’s affairs and distribute any remaining funds before dissolving the company.

Question 3

What is wrongful trading?

Answer 3

When directors allow a company to continue trading when they knew or ought to have known there was no reasonable prospect of avoiding insolvency.

Question 4

What is dissolution?

Answer 4

The final stage of winding up where the company ceases to exist.

Question 5

Quick Hit
Liquidation

Answer 5

Process of winding up a company.

Question 6

Quick Hit
Liquidator

Answer 6

Person appointed to wind up the company.

Question 7

Quick Hit
Wrongful Trading

Answer 7

Continuing to trade while insolvent.

Question 8

Quick Hit
Dissolution

Answer 8

Legal end of a company’s existence.