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Company liquidation is divided into three different types, and the specific procedures for liquidation are also different.

1. Bankruptcy Liquidation

1. Bankruptcy Declaration

Article 107 of the "Enterprise Bankruptcy Law of the People's Republic of China" stipulates that bankruptcy The declaration shall be delivered to the debtor and administrator within five days from the date of the People's Court's ruling, and known creditors shall be notified and announced within ten days from the date of the ruling.

2. Bankruptcy property valuation plan

Article 111 of the "Enterprise Bankruptcy Law of the People's Republic of China" stipulates that the bankruptcy property valuation plan shall be drawn up by the administrator and Submit to the creditors meeting for discussion and approval.

3. Price change

Article 112 of the "Enterprise Bankruptcy Law of the People's Republic of China" stipulates that the administrator shall act in accordance with the decision passed by the creditors' meeting or ruled by the people's court. Bankruptcy property price change plan, which sells bankrupt property at a price through auction. Unless otherwise resolved by the creditors' meeting.

4. Liquidation

Article 113 of the "Enterprise Bankruptcy Law of the People's Republic of China" stipulates that the bankruptcy property shall be liquidated in the following order. The bankruptcy property is insufficient to liquidate the debt. Repayment requirements in the same order will be distributed in proportion.

(1) Bankruptcy expenses and welfare debts;

(2) The wages, medical care, disability benefits and pensions owed by the bankrupt to employees shall be owed Basic pension insurance and basic medical insurance premiums transferred to employees' personal accounts, as well as compensation that should be paid to employees according to laws and administrative regulations. The salaries of directors, supervisors and senior managers of a bankrupt enterprise shall be calculated based on the average salary of the employees of the enterprise;

(3) Social insurance premiums owed by the bankrupt other than those stipulated in the preceding paragraph and owed by the bankrupt Taxes;

(4) Ordinary bankruptcy claims.

5. Termination

Articles 120 and 121 of the "Enterprise Bankruptcy Law of the People's Republic of China" stipulate that the company has no property available for After the distribution or final distribution is completed, the administrator applies to the People's Court for a ruling to terminate the bankruptcy proceedings. If the people's court decides to terminate the bankruptcy proceedings, it shall make an announcement.

The administrator shall, within ten days from the date of termination of the bankruptcy proceedings, apply for deregistration to the bankrupt’s original registration authority based on the People’s Court’s ruling to terminate the bankruptcy proceedings.

2. Non-bankruptcy liquidation

1. Liquidate the company’s property and formulate a liquidation plan

Article 18 of the Company Law of the People’s Republic of China Article 16 stipulates that the liquidation team shall formulate a liquidation plan after clearing the company's assets and preparing a balance sheet and property list.

(1) Investigate and clean up company property. The liquidation team prepares the company's balance sheet, property list and catalog of claims and debts based on the creditors' declarations and investigation of the liquidation of the company's properties.

(2) Formulate a liquidation plan. After preparing the company's financial accounting report, the liquidation team should formulate a liquidation plan and propose specific arrangements for collecting claims and paying off debts.

(3) Submit to the shareholders’ meeting for approval or report to the competent authority for confirmation. For the company's liquidation plan, a joint stock company shall submit the liquidation plan to the shareholders' meeting for approval; a limited liability company shall submit the liquidation plan to the shareholders' meeting for approval. For companies that are dissolved and liquidated due to illegal activities, the liquidation plan must be submitted to the relevant competent authority for confirmation.

(4) If the liquidation team discovers that the company's property is insufficient to pay off its debts when cleaning up the company's property and preparing a balance sheet and property list, the liquidation team has the responsibility to immediately apply to the people's court with jurisdiction to declare bankruptcy. . After the People's Court declares bankruptcy, the liquidation team shall transfer the liquidation matters to the People's Court.

2. Settlement of the company’s claims and debts

(1) Handle the company’s unfinished business. Article 186 of the "Company Law of the People's Republic of China" stipulates that during liquidation, the company shall not carry out new business activities. However, the liquidation team has the right to handle the company's unfinished business for the purpose of liquidation.

(2) Collect company claims. The liquidation team shall promptly request the company's debtors to pay off the company's creditor's rights that have expired. For undue corporate claims, the debtor should be required to pay off in advance as much as possible. If the debtor does not agree to pay off in advance, the liquidation team can pay off in disguised form by transferring the claims and other methods.

(3) Pay off the company’s debts. After clearing up the company's properties and preparing a balance sheet and property list, the liquidation team confirms that the company's existing properties and claims are greater than the debts owed and are sufficient to repay all the company's debts. The liquidation team shall pay off the debts to creditors in accordance with the legal order.

First of all, the company's liquidation expenses should be paid, including the expenses required for the evaluation, custody, sale and distribution of the company's property, announcement expenses, remuneration of liquidation team members, fees for entrusting certified public accountants and lawyers, and Litigation costs, etc.; secondly, payment of employees’ wages, social insurance premiums and statutory compensation; thirdly, payment of taxes owed; and finally, repayment of other company debts.

When paying off company debts, you should pay attention to the following three points:

a. There is generally no order of priority for repaying company debts, but the company’s property must be able to pay off company debts;

b. The company is generally not allowed to pay off its debts before the deadline for calling on creditors to declare their debts expires;

c. The company’s property is not allowed to be distributed to the company’s shareholders before all the company’s debts are paid off.

After cleaning up the company's assets and preparing a balance sheet and property list, the liquidation team shall formulate a liquidation plan and submit it to the shareholders' meeting, general meeting of shareholders or the people's court for confirmation.

The remaining property of the company after paying liquidation expenses, paying taxes owed, and repaying the company's debts shall be distributed in accordance with the proportion of the shareholders' capital contribution in a limited liability company and in accordance with the proportion of shares held by the shareholders in a joint stock company. distribute.

During liquidation, the company continues to exist, but it is not allowed to carry out business activities unrelated to liquidation. The company's property shall not be distributed to shareholders before it is paid off in accordance with the provisions of the preceding paragraph.

3. Distribution of the company’s remaining property

According to Article 187 of the Company Law of the People’s Republic of China, the company’s remaining property after all debts of the company have been paid off The property of a limited liability company is distributed according to the proportion of the shareholders' capital contribution, while the joint stock company is distributed according to the proportion of the shares held by the shareholders. Obtaining the right to distribute the company's remaining property is an important part of the company's shareholders' rights and interests, and it is the basic right of the company's shareholders.

3. Free liquidation

Generally, there is no sequential procedure for free liquidation. Free liquidation, also known as arbitrary liquidation, refers to the liquidation of a company in accordance with the will of shareholders and the provisions of the company's articles of association. Regardless of whether such liquidation can be paid in full, the unpayable claims will not be extinguished upon the completion of the liquidation. Discretionary liquidation usually applies to limited liability companies and unlimited companies.

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