Voluntary liquidation or bankruptcy: the difference
Both end a company, but not in the same way. It is better to choose before a creditor does.
Voluntary liquidation
The shareholders themselves decide to close the company, appoint a liquidator and settle the creditors in order. It is a chosen procedure, run on the company's own timetable.
Bankruptcy
Bankruptcy is declared by a court, generally at a creditor's request or when the company can no longer pay its debts. A trustee takes over the company.
The differences
- Who decides. The shareholders for voluntary liquidation, the court for bankruptcy.
- Control. The liquidator chosen by the shareholders, or the trustee appointed by the court.
- Solvency. Voluntary liquidation assumes the company can pay its debts. Bankruptcy applies when it no longer can.
- Image and consequences. A bankruptcy can have heavier consequences for the company and its officers.
Act early
A company with no activity left is better off choosing voluntary liquidation than waiting for a summons. For that the file must be up to date. If proceedings have started, you need a lawyer straight away. See voluntary liquidation and organising the file.
Frequently asked questions
Can a company in difficulty be voluntarily liquidated?
It depends on its financial position. If it can no longer pay its debts, other rules apply. A lawyer confirms this for you.
Who appoints the liquidator?
The shareholders, at the meeting that decides the dissolution.
What happens to the officers in a bankruptcy?
Their liability can be examined. That is a point for your lawyer.
Let's talk about your company.
Describe your situation. We reply with a first view of the way forward.