This is a relatively simple, inexpensive, and quick procedure for dissolving non-operational private companies that meet certain requirements.
In order to deregister a company, the assets and liabilities must be disposed of prior to commencing the deregistration process.
The laws of the state of incorporation govern the dissolution process, so it’s important to remember that the process described below will differ if the business is incorporated in another state.
Corporations typically choose to do a corporate dissolution when they don’t need bankruptcy protection (and prefer to avoid filing bankruptcy) but want to have the corporation formally wound down.
The Directors will then be reinstated to their position as Directors of the Company as though it had not been removed from the Register and any claim against the Directors enforced.
Dissolution of the company takes place after the entire process of winding up is over.
The most important difference between bankruptcy and winding up is that in a bankruptcy proceeding the property of the bankrupt passes to a trustee who is appointed by a court to sell the property to pay the debts of the bankrupt party.
However, in a winding up of a company, all the assets of the company still remain with the company until its dissolution, unless disposed of in the course of winding up by the liquidator.
Once this is done, the debtor is given a discharge, which cancels the rest of the debt permanently.
The entire process takes about three to four months after the bankruptcy paperwork is filed, if everything goes smoothly.