How liquidation can be made use of?

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<p id="isPasted">Liquidation can be used by both businesses and individuals as a way to convert assets into cash, settle debts, and ultimately wind up affairs. While often associated with insolvency, it can be either a voluntary or compulsory process, depending on the circumstances.&nbsp;</p><p><strong>How businesses can use liquidation</strong></p><p><strong>For insolvent companies</strong></p><ul><li>When a business cannot pay its debts as they become due, liquidation serves as the final step in closing the company and fairly distributing assets.&nbsp;</li><li>Settling with creditors: This is the primary use of liquidation for an insolvent company. An appointed liquidator sells the business's assets—which can include property, equipment, and inventory—and uses the proceeds to pay creditors according to a legally established hierarchy. Secured creditors are paid first, followed by employees, unsecured creditors, and finally, shareholders.</li><li>Managing liabilities: By entering formal liquidation, directors can manage the close-down process in an orderly manner and avoid the more severe consequences associated with compulsory liquidation, which can result from a creditor taking legal action.</li><li>Ending an unsustainable business: When a company's business model is no longer profitable and there is no prospect of recovery, liquidation provides a formal mechanism to cease operations and dissolve the corporate entity. </li></ul><p><strong>As a strategic exit</strong></p><ul><li>Liquidation isn't always the result of financial failure. Solvent companies may also use liquidation as a deliberate business strategy.&nbsp;</li><li>Member's Voluntary Liquidation (MVL): When a company has paid off all its debts and the shareholders decide to cease operations, they can voluntarily liquidate. The assets are converted to cash, and the remaining proceeds are distributed to the shareholders. This can be used as a tax-efficient way for business owners to exit their company.</li><li>Selling off non-core assets: The term "liquidation" can also refer to selling off parts of a business. A company might liquidate underperforming inventory or divest itself of a division that no longer fits its core strategy. This raises capital and allows the business to focus on its more profitable operations. </li></ul>