Recently the economy in the U.S. has been somewhat unstable and the result of this is that consumers have tightened up on their spending. For many companies this means that boom times have gone bust and this is particularly true in the housing market in the U.S. More and more people are finding themselves involved in an insolvency proceeding by either being a shore holder, a partner or being owed money or services by the company that is going through insolvency.

There are three basic forms of insolvency and they are members voluntary, creditors voluntary and compulsory liquidation and while they all have similarities they also have differences that set them apart. With members voluntary insolvency the share holders or partners have unanimously agreed to liquidate and the total value of the companies assets to be liquidated, exceeds the total amount of money that is owed by the company. With regards to creditors voluntary liquidation, all of the share holders or partners again agree to the liquidation but the value of the assets to be liquidated does not equal the amount of the money that is owed by the company.

With compulsory liquidation, it is ordered by a court and is therefore compulsory. There can be any of a number of reasons for liquidation and it does not necessarily mean the end of the company. In fact many companies have emerged from liquidation in great shape and gone on to prosper. The first step of the liquidation process is for the company to stop doing business and hand the actual controls of the company over to a receiver or group of receivers who will then notify all parties that are to be involved that the company is going through liquidation. This means that all share holders will be notified, as well as anyone that the company owes money to.

Written by James Keenen. Find the latest information on Insolvency as well as Liquidation

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