Solvent Liquidation

Solvent liquidation occurs when a company's assets are sold off after it has decided to close down, even though the company still has enough assets and cash to pay all its debts. Unlike insolvent liquidation, where the company cannot meet its obligations, solvent liquidation is often done to wind up the business efficiently, sometimes for reasons like restructuring or sharing assets among shareholders. The proceeds from selling assets are used to settle any remaining liabilities, and any leftover funds are distributed to shareholders before the company is formally dissolved.