what is a voluntary liquidation 
a voluntary liquidation is a self imposed windup and dissolution of a company that has been approved by its shareholders such a decision will happen once an organization s leadership decides that the company has no reason to continue operating it is not a compulsory order by a court the purpose is to terminate a company s operations wrap up its financial affairs and dismantle its corporate structure in an orderly fashion while paying back creditors according to their assigned priority understanding a voluntary liquidationa voluntary liquidation resolution must be initiated by a company s board of directors or ownership the process begins after a resolution to cease operations assuming that operations are ongoing is approved by the company s shareholders the shareholder vote allows the liquidation of assets to free up funds to pay debts a voluntary liquidation stands in contrast to a forced liquidation which involves the involuntary sale of assets or securities to create liquidity due to an unforeseen or uncontrollable situation the reasons for a voluntary liquidation are numerous it may happen due to unfavorable business conditions such as operating at a loss or the market moving in another direction or business strategy considerations ownership may want to exact a degree of tax relief for shutting down or decide to reorganize and transfer assets to another company in exchange for an ownership or equity stake in the acquiring company in some cases the liquidating company was only meant to exist for a limited amount of time or for a specific purpose that has been fulfilled it can also be due to a key company member leaving which causes the shareholders to decide not to continue operations voluntary liquidation processin the united states a voluntary liquidation may begin with the occurrence of an event as specified by a company s board of directors in such cases a liquidator who answers to shareholders and creditors is appointed if the company is solvent the shareholders can supervise the voluntary liquidation if the company is not solvent creditors and shareholders may control the liquidation process by getting a court order unless the u s comptroller of the currency waives this requirement stockholders owning two thirds of the company s shares must vote in favor of the voluntary liquidation voluntary liquidations in the united kingdom are divided into two categories one is the creditors voluntary liquidation which occurs under a state of corporate insolvency the other is the members voluntary liquidation which only requires a corporate declaration of bankruptcy under the second category the firm is solvent but needs to liquidate its assets to meet its upcoming obligations stockholders owning three quarters of a company s shares must vote in favor of a voluntary liquidation resolution for the motion to pass 