There are two main types of liquidations for insolvent companies– compulsory liquidation and creditor’s voluntary liquidation (CVL).
When the companies all assets are sold to repay its creditors, business closes down, and its name is removed from the register at company’s house. which is called (Members Voluntary Liquidation) MVL. At this time companies will go for liquidation.
In UAE only registered and authorized liquidator shall be named to liquidate a free zone company. Both employee permits will be cancelled at the time a company is liquidated in free zone. Liquidated letter must be submitted for free zone in the UAE only to the registered and authorized auditor. Nearly all free zones have the same set of business liquidation procedures.
Before liquidation of any company auditor will take care of all these things:
- Settling down all utility bills of the company.
- Paying off telecommunication bills
- Closure of bank accounts of the company
- Preparing final audit report
- Cancellation of all the visa under the license of the company.
Liquidating a company in the UAE will face obstacles during the entire process and is also a step wise process in which time is slowly consumed.