In the realm of business law, the term dissolution often refers to the termination of a company due to bankruptcy, liquidation, or other legal proceedings. In such cases, the assets of the company must be liquidated, or “realised,” in order to pay off creditors and other obligations. This process is known as realisation of assets on dissolution.
The realisation of assets on dissolution is a complex process. It involves the identification, valuation, and sale of all the assets of the company, including cash, real estate, inventory, accounts receivable, intellectual property, and any other assets that may have value. These assets must then be sold off in order to pay off creditors and other obligations.
Identification of Assets
The first step in the realisation of assets on dissolution is the identification of all assets held by the company. This can be a difficult task because it requires a thorough understanding of the company’s financials, including its accounts receivable, inventory, and accounts payable. In addition, the assets must be properly valued in order to ensure that they are sold for their fair market value.
Valuation of Assets
Once the assets have been identified, they must be properly valued. This is typically done by an independent valuation expert who has an understanding of the company’s financials and the market value of the assets. The expert will use a variety of methods to determine the fair market value of the assets.
Sale of Assets
Once the assets have been identified and valued, they must be sold off in order to pay off creditors and other obligations. The sale of assets is typically done through an auction process, but it can also be done through a private sale. The sale price of the assets must be at least equal to their fair market value in order to satisfy the creditors.
Distribution of Proceeds
Once the assets have been sold off, the proceeds must be distributed to the creditors and other obligations in accordance with the terms of the dissolution. This process can be complicated and can involve significant legal fees.
Limitations
The realisation of assets on dissolution is a complex process and can be subject to a number of limitations. For example, some assets may not be eligible for sale due to legal restrictions, or they may be subject to certain taxes or fees. Additionally, the process may be limited by the amount of time available or the availability of funds.
Conclusion
The realisation of assets on dissolution is a complex process that involves the identification, valuation, and sale of all assets. It is important to understand the process and the potential limitations in order to ensure that the assets are sold for their fair market value and that the proceeds are distributed in accordance with the terms of the dissolution.
