The Position of the Secured Creditor in Liquidation or Administration

Acknowledgement

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

DECLARATION

I, [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University.

Signed __________________ Date _________________

Abstract

The fact that there is a cause for dissolution does not mean that company will end immediately, but there will be the starting point for the state of dissolution that will lead to another process such as liquidation. The General Law of Commercial Companies in our country, recognized in article 234, the principles of the Company to be in a state of dissolution, the same way, in Article 244 of the same law states that the purpose to create a solution in society and even in that state, retain its legal personality for the purposes of settlement. Liquidation and preservation of the company, the historical account of the provisions applicable to the dissolution of corporations shows a strong and complicated relationship between two conflicting principles, the dissolution of the will and for strictly personal reasons or conservation the company above personal interests of members and otherwise in the individual will of each of the partners.

Table of Contents

CHAPTER 1: MEANING OF LIQUIDATION/INSOLVENCY1

Liquidation / Insolvency1

The Money Flow Test5

Balance Sheet Test7

Legal Activity test7

CHAPTER 2: SECURED CREDITOR9

Secured Creditor9

Bankruptcy and the Secured Creditor Advantage11

Encumbered assets, unsecured liabilities, and the liquidator's duties19

CHAPTER 3: CIRCULATION OF THE ASSETS OF AN INSOLVENT33

Corporate Insolvency Law33

CHAPTER 4: THE POSITION/TREATMENT OF PROTECTED CREDITOR IN LIQUIDATION/ADMINISTRATION39

The research methodology44

Discussion49

Open learning50

CHAPTER 5: CONCLUSION AND RECOMMENDATION51

Insolvent liquidation process for closing a business53

Recommendations54

REFERENCES58

Chapter 1: Meaning of Liquidation/Insolvency

Liquidation / Insolvency

Liquidation is the process by which a company (or part of a company) is brought to an end, and the assets and property of the company redistributed. Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation. The process of liquidation also arises when customs, an authority or agency in a country responsible for collecting and safeguarding customs duties, determines the final computation or ascertainment of the duties or drawback accruing on an entry.

Liquidation (or Liquidation in the market) is the ease with which financial market participants can quickly carry out large transactions without a significant price impact. An investor buys a financial instrument in a liquid market with confidence that the prospect is ready for sale in the future. In the absence of Liquidation in the market, the investor takes the risk and Liquidation risk of financial assets not easily sold. A financial instrument that trades in highly liquid market implies lower Liquidation risk, thus encouraging further investment and reduces funding costs for the issuer.

Another advantage of Liquidation is the rapid opening of the price. New information is an important factor ...