The processes of reorganization and liquidation have much in common, although legally they are completely different individual procedures with their own characteristics. The termination of the organization is the main unifying similarity of these events.
Liquidation of an organization
The final and complete termination of the activity of the enterprise implies its liquidation. Liquidation of an enterprise can be both voluntary and compulsory. Forced liquidation of the company occurs in the event that the regulatory authorities reveal gross violations of the law during the period of the enterprise's management. In case of voluntary liquidation, the company submits an application to the regulatory authorities, makes final financial settlements with suppliers and customers, and reduces the balance sheet to zero.
In the process of liquidation, obligations arise for the final settlement of their debts, bank loans, the issuance of monetary rewards to employees of the enterprise, the payment of mandatory payments to the state budget and contributions to other social funds.
The liquidation of a legal entity is carried out by a special liquidation commission in accordance with the established legislation.
Company reorganization
The process of reorganization in the end is also the liquidation of the enterprise, but in this case, all rights and obligations are transferred to another organization. There are several methods for reorganizing legal entities.
In the event of a merger of organizations, the legal entity subject to reorganization transfers to another all its rights and obligations. This type of reorganization implies a reduction in management costs, a combination of capitals, economic efficiency from an increase in the scale of production. The merger makes it possible to increase the competitiveness of the newly created enterprise.
Acquisition of an enterprise as a method of reorganization implies the transfer of obligations and rights from an organization that ceases to operate to another economic organization engaged in economic activity. In this case, the operating organization assumes the entire tax burden. With this method of reorganization, another legal entity is not registered.
Spin-off in the process of reorganization is applied in the event of the termination of the activities of an economic organization and the formation of several new legal units on its basis.
The transformation procedure involves changing the legal and legal form of the organization to be reorganized. This is the transformation of one commercial enterprise into another with a change in ownership or status. In this case, all obligations and rights from the previous organization are transferred to the newly formed legal entity.
