In United Kingdom and United States law and business, 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 are 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.
The parties who are entitled by law to petition for the compulsory liquidation of a company vary from jurisdiction to jurisdiction, but generally, a petition may be lodged with the court for the compulsory liquidation of a company by: The grounds upon which one can apply for a compulsory liquidation also vary between jurisdictions, but the normal grounds to enable an application to the court for an order to compulsorily wind-up the company are: A "just and equitable" winding-up enables the grounds to subject the strict legal rights of the shareholders to equitable considerations.
It can take account of personal relationships of mutual trust and confidence in small parties, particularly, for example, where there is a breach of an understanding that all of the members may participate in the business, Upon hearing the application, the court may either dismiss the petition, or make the order for winding-up.
The court may dismiss the application if the petitioner unreasonably refrains from an alternative course of action.
When the Agway Plan of Liquidation was confirmed in the Spring of 2004, it was estimated that a total distribution of 54-66% would be made to unsecured creditors and provisions were made to permit the Liquidating Trust to make those distributions over a period of up to eight years (longer if necessary and approved by the Internal Revenue Service).
In under five years, the Trust has distributed 71% per dollar of allowed claim.
The only significant remaining assets include cash or cash equivalents (the "Collateral") pledged to Agway's insurance companies to ensure payment of insured claims against Agway (such as former workers receiving permanent disability payments).
Under the contracts with those insurance companies, the insurers may be entitled to retain all of the Collateral until every insured claim is fully resolved.
The Liquidating Trustee believes that the insured claims will never exceed the total amount of collateral being held by the insurance companies, and is attempting to obtain a consensual return of the excess collateral.
If those negotiations are successful, an additional distribution should take place within six months and the Trust would likely be closed in 2011.
If those negotiations are unsuccessful, any further distributions would be dependent on successful litigation against the insurance companies and could take years and might never occur.
More details can be found in the Annual Report from the Liquidating Trustee.