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ACC701- Accounting Financial
In this following assignment, we are going to discuss about three companies who faced the problem of liquidation in past few years. These companies went into liquidation as they became incapable of paying their liabilities and other dues on time. Further, in this assignment we will be discussing about the facts that has led to the liquidation of the companies. Apart for this, we will evaluate the role of governance, ethics and other contributors in the liquidation of the companies.
Liquidation is a situation where a company has to wind up all its business activities and have to sell all the assets and inventories to pay the due debts. By selling all the assets and inventories companies generate cash to pay amounts to the creditors. The liquidation comes in two forms that are involuntary and voluntary. In the case of voluntary liquidation, company itself sell all its assets to finish of the dues of creditors where as in the involuntary liquidation, companies are forced to close yup their business and to repay the amount of creditors. Whatever the situation, companies ultimately have to wind up their businesses. There can be many reasons for the company’s liquidation like not paying the taxes from a long time, generating higher amounts from the creditors, failed to generate target sales, etc.