2 liquidation Liquidation as applied to a corporation means the winding up of

2 liquidation liquidation as applied to a corporation

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2.liquidation- Liquidation, as applied to a corporation, means the winding up of the affairs of the corporation by reducing its assets in money, settling with creditors and debtors, and apportioning the amount of profit and loss. It consists of adjusting all debts and claims, that is, of collecting all that is due the dissolved corporation, the settlement and adjustment of claims against it, and the payment of its debts. II.Discussions1. What are the voluntary methods for dissolving a corporation? (a) by the vote of the board of directors/trustees and the stockholders/members where no creditors are affected (b) by judgment of the Securities and Exchange Commission after hearing of petition for voluntary dissolution where creditors are affected (Sec. 119.); (c) by amending the articles of incorporation to shorten the corporate term (Sec. 120.); or (d) In the case of a corporation sole, by submitting to the Securities and Exchange Commission a verified declaration of dissolution for approval. (Sec. 115.) 2. Give the two (2) legal steps involved in the dissolution of a corporation. Dissolution of a corporation involves two legal steps: (1) The termination of the corporate existence at least as far as the right to go on doing ordinary business is concerned; and (2) The winding up of its affairs, the payment of its debts, and the distribution of its assets among the shareholders or members and other persons interested. After winding up, the existence of the corporation is terminated for all purposes.
Republic of the Philippines Batangas State University COLLEGE OF ACCOUNTANCY BUSINESS ECONOMICS AND INTERNATIONAL HOSPITALITY MANAGEMENT Batangas City III.Problems1. Z, Inc. is dissolved. a. The board of directors approved a resolution authorizing the payment by the corporation under a contract. Is the resolution valid? -It depends. According to Section 122, Z, Inc. shall nevertheless continue as a body corporate for three (3) years after the time when it would have been so dissolved, for the purpose of prosecuting and defending suits by or against it and enabling it to settle and close its affairs, to dispose of and convey its property and to distribute its assets, but not for the purpose of continuing the business for which it was established. b. After the lapse of the three (3) year winding up period, what remedies, if any, are available to a corporate creditor to recover the debts of the corporation? -The law does not allow any extension of the period. However, a creditor with a pending action against Z, Inc. or Z, Inc. with a pending suit filed by it may prevent the abatement by asking the proper court for the appointment of a receiver or trustee within the winding up period. The trustee may sue and be sued as such in all matters connected with the liquidation, even beyond the period where there is no time limit within which the trustee must finish the liquidation. It may be found impossible to complete the work of liquidation within the three-year period.

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