Voluntary Liquidation

AAA

DEFINITION of 'Voluntary Liquidation'

A corporate liquidation that has been approved by the shareholders of the company. Voluntary liquidations stand in contrast to involuntary liquidations, which are a result of Chapter 7 bankruptcy. The shareholder vote allows the company to liquidate its assets to free up funds to pay debts.

INVESTOPEDIA EXPLAINS 'Voluntary Liquidation'

Voluntary liquidations in the UK are divided into two categories. One is the creditors' voluntary liquidation, which occurs under a state of corporate insolvency. The other is the members' voluntary liquidation, which only requires a corporate declaration of bankruptcy. Under the second category, the firm is solvent, but needs to liquidate their assets to meet their upcoming obligations.

Voluntary liquidation can also happen if a vital member of the organization leaves the company and the shareholders decide not to continue operations.

RELATED TERMS
  1. Central Loss Fund

    A fund set aside by some states in order to cover policyholder ...
  2. Chapter 7

    A bankruptcy proceeding in which a company stops all operations ...
  3. House Call

    A brokerage house notification that the customer's equity in ...
  4. Forced Liquidation

    An action taken by brokerage houses that offsets and closes all ...
  5. LIFO Liquidation

    When a company using the LIFO (Last In, First Out) method of ...
  6. Liquidation

    1. When a business or firm is terminated or bankrupt, its assets ...
Related Articles
  1. Liquidity And Toxicity: Will TARP Fix ...
    Insurance

    Liquidity And Toxicity: Will TARP Fix ...

  2. Liquidation Blues: When Mutual Funds ...
    Investing Basics

    Liquidation Blues: When Mutual Funds ...

  3. Distressed Debt An Avenue To Profit ...
    Bonds & Fixed Income

    Distressed Debt An Avenue To Profit ...

  4. Bank Failure: Will Your Assets Be Protected?
    Options & Futures

    Bank Failure: Will Your Assets Be Protected?

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center