Liquidation Services


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What is Liquidation?

Liquidation is a formal insolvency procedure in which a company is brought to an end (also often termed 'winding up' or 'closing' a company); all of its assets are liquidated and the proceeds from the sale of assets are used to settle debts, pay expenses and transfer any remaining balance to shareholders of the company.

Once a company is liquidated, it will cease doing business and employing people. On liquidation, a companspades;'s business license is revoked, its name is removed from the Trade Registry and the entity is considered to have ceased to exist.


What exactly is the need for liquidation?

In the United Arab Emirates, there are two main reasons why a company's liquidation may be required:

The original reason for forming the company has been met, and the entity is no longer needed;

The business is considered bankrupt.

Types of liquidation

Voluntary Liquidations - A solvent company's shareholders can choose to liquidate it, or an insolvent company's directors can choose to stop trading and liquidate its assets to pay its creditors.

Compulsory Liquidations - If a company's debts aren't paid on time, creditors can ask the courts to liquidate the company so that they can get their money. In order to pay off outstanding debts, the courts may order a company to liquidate and sell its assets.

What does a liquidator do?

A liquidator is a UAE-registered agent or a firm, typically a chartered accountancy or audit firm, that is assigned to act on behalf of the company to sell its assets in order to generate cash to discharge any outstanding liabilities. A liquidator may be appointed by shareholders via resolution or may be appointed by the courts in the case of compulsory liquidation.

Once appointed, the liquidator will issue an official letter of acceptance at the initial stage. Once all its duties are completed, they will prepare a statement of affairs and the liquidator's report, which are essential to finalize the liquidation process.

What can Nafa Consultant do for you?

The liquidation process can be lengthy and costly because companies must liaise with a number of external parties/authorities to arrange everything in a timely manner. Missing out any step or document will cause unnecessary delay and complication.

Nafa Consultant offers liquidation services for all UAE entities - LLCs, free zone companies and offshore companies - from a complete liquidation to assisting with a part or parts of the process, as required by the client.