Services Glossary

Not sure what liquidation, insolvency or business recovery mean? Getting confused by the terms liquidation, receivership and creditors compromise? Read below to learn more.

Liquidation
What is Liquidation?

In law, 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 redistributed. Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation.
[Source: http://en.wikipedia.org/wiki/Liquidation ]

Receivership
What is Receivership?

Companies often gain finance by offering an asset as security over investment from a creditor. That creditor is then known as a secured creditor.
If the company fails to repay their debts, this secured creditor can appoint a receiver under the Receivership Act (1993)  to manage the sale of the asset to repay the debt owed to them. This process is called Receivership.
[Source: http://www.business.govt.nz/starting-and-stopping/exiting-a-business/managing-involuntary-closure-for-companies ]

Creditors Compromise
What is a Creditors Compromise?

The first step if you can’t pay your debts is to work towards a ‘compromise’ with the people or organisations you owe money to (the creditors). A creditor’s compromise is an informal agreement

with creditors that may allow you to reduce the amount you owe, alter your payments to something you can afford, and possibly allow you to keep your business going.
[Source: http://www.cab.org.nz/vat/money/bd/Pages/InsolvencyandBankruptcy.aspx ]

Trustee Service for Insolvent Individuals
What does this mean?

Insolvent:
A situation in which a person or business is unable to pay off their debts even if all their assets are liquidated.
[Source: http://www.business.govt.nz/companies/help-support/glossary#I ]

Business Recovery
What does Business Recovery mean?

Business Recovery identifies an organisation’s exposure to internal and external threats and synthesises hard and soft assets to provide effective prevention and recovery for the organisation, while maintaining competitive advantage and value system integrity
[Source: https://en.wikipedia.org/wiki/Business_continuity_planning]

Business Valuations
What is a Business Valuation?

A business valuation is a processed set of procedures used to estimate the economic value of an owner’s interest in a business.
[Source: http://en.wikipedia.org/wiki/Business_valuation ]

Financial Due Diligence Review
What is Financial Due Diligence?

A common example of due diligence in various industries is the process through which a potential acquirer evaluates a target company or its assets for an acquisition.
[Source: https://en.wikipedia.org/wiki/Due_diligence]