• Voluntary winding up of company: A voluntary winding up of company may be initiated by a special resolution or a resolution adopted at a general body meeting. To compel the winding up, the provisions and conditions of the Memorandum of Association (MOA) may be violated.
• Compulsory winding up of Company: To carry out the compulsory winding up of a company at the command of a tribunal or a court, a specific resolution by the directors urging a court intervention may be passed during the firm’s board meeting. Similar to this, the corporation must be forced to dissolve if any official files a petition with a court or a tribunal or if it engages in any illegal or fraudulent activity.

When a company goes into liquidation, its assets are sold, and the proceeds are used to settle the outstanding debts and liabilities. The priority of claims determines the order in which these debts are paid. The priority typically follows a specific hierarchy, and the claims are settled in the following order:
1. Secured Creditors: Secured creditors are those who hold a charge or security interest over specific assets of the company. They have a priority claim to the proceeds from the sale of the assets that secure their debts. Common examples of secured creditors include mortgage holders and other lenders with collateral.
2. Costs and Expenses of the Winding-Up: The costs and expenses associated with the winding-up process, including legal fees, administrative expenses, and fees for insolvency practitioners, are given priority and are settled next.
3. Preferential Creditors: Preferential creditors are specific creditors who are granted priority under the law. These creditors are usually government-related claims such as unpaid taxes, employee wages and salary owed (up to a statutory limit), and certain social security contributions. In some jurisdictions, this category may also include unpaid employee pension contributions.
4. Unsecured Creditors: Unsecured creditors are those who do not hold any security or charge over the company’s assets. They are paid after secured creditors, costs, and preferential creditors. Examples of unsecured creditors are suppliers, trade creditors, and general lenders.
5. Subordinated Creditors: In some cases, certain creditors may be subordinated, meaning their claims have a lower priority than those of other creditors. Subordination can occur through contractual agreements or other legal arrangements.
6. Shareholders: Shareholders are the owners of the company, but they are the last to receive any distribution, and only if there are remaining assets after all the creditors have been paid in full.

1. PAN card for the business
2. Closing statement for the business’s bank account
3. A notarised indemnification bond that the directors must execute
4. Most recent financial statement for the business
5. Accounts that include all of the company’s assets and obligations that have been reviewed by a Chartered Accountant.
6. Proof that at least 3/4 of the board members have approved the resolution
7. Application to change the company’s name

After a company is declared insolvent, a liquidator is appointed to auction off the company’s assets.
~You lose control over the firm or its assets
~The directors loose power and are unable to affect the company’s course.
~All of the assets will be sold, to pay off debts
~Personal Guarantees may still be due from the directors/employees
~You might be prohibited from practicing your occupation by Government Regulations