When a company is in liquidation, it is either struck off or wound up. There may be a few reasons why a company would be closed down:
- It cannot pay its debts or has liabilities due in excess of its assets. A creditor may commence legal action against the company by making an application to court, backed by proof of debt. If the company is unwilling/unable to repay or settle the debt, it may be wound up.
- It has ceased business activities either because it is dormant or is not profitable
- There is a breach of laws and regulations by the officers of the company or offences by the company for non-compliance
- There is a corporate restructuring either internally or as part of a group of entities
- There is a dispute(s) amongst shareholders that are irresolvable
