In simple terms, liquidation is the process of terminating a business's operations. There are various reasons why a business might choose to shut down, including a lack of willingness to continue, insolvency, and others. Liquidation involves selling a company's assets to fulfill its obligations and settle liabilities.

When a business is liquidated due to bankruptcy, the liquidator sells the company's assets to repay all outstanding debts. Any remaining funds after settling the creditors' claims are distributed among the company's shareholders. The process of company liquidation is complex and requires careful handling.

The board must convene to approve the dissolution of the company. It is advisable to appoint an official liquidator or insolvency expert for the process. Concurrently, the approval of the Income Tax Department's NOC should be sought. Additionally, before initiating the winding-up proceedings, a notification must be sent to the Insolvency and Bankruptcy Board of India (IBBI) within seven days of passing the resolution. The entire winding-up process of the company should be completed within 12 months from the commencement of the company's liquidation.