What is the difference between dissolving and liquidating a company
The laws of the state of incorporation govern the dissolution process, so it’s important to remember that the process described below will differ if the business is incorporated in another state.
Corporations typically choose to do a corporate dissolution when they don’t need bankruptcy protection (and prefer to avoid filing bankruptcy) but want to have the corporation formally wound down.
Broadly speaking, there are two different ways to go bankrupt: liquidation (Chapter 7) or reorganization (Chapter 11 or Chapter 13).
In the next two sections, I will introduce you to these two variations and explain, briefly, how they apply to both individuals and companies.
This is a relatively simple, inexpensive, and quick procedure for dissolving non-operational private companies that meet certain requirements.
These provisions apply equally to a listed company, a public limited company as well as a private limited company.
Sometimes a bankruptcy filing is needed, either a Chapter 11 reorganization (perhaps to complete a going-concern sale) or a Chapter 7 liquidation bankruptcy (in which a trustee will be appointed to liquidate the business).