Compulsory liquidation is a court-based procedure where the court rules that a company is in a suspension of payments situation as well as being beyond rescue.
Generally, companies are created for an indefinite period. However, they can be dissolved:
1) once the period stated in its articles of association has been reached;
2) by court order for legitimate reasons;
3) voluntarily, by shareholders’ general meeting (dissolution).
If the shareholders decide to dissolve the company, it will be wound up. This procedure is voluntary, as opposed to bankruptcy, which is imposed on the company when it is in a suspension of payments and credit weakness situation. A provisional liquidator will be appointed by the company (and confirmed by the commercial court) in order to realise the assets of the company, settle any debts and charges that it might possess and, finally, to distribute the net assets between the partners or shareholders on completion of the liquidation. The commercial court will oversee and verify this procedure.
Definitions provided under this section refer to the Belgian situation; unless specified otherwise. The texts are meant to summarize concepts in daily language and should not be considered as comprehensive or definite. We welcome suggestions for modifications or additions at email@example.com.