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Parent Company Liquidation Query

Parent Company Liquidation Query

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Company A is the parent and has 4 subsidiary's. If company A is in liquidation what happens to the subsidiary companies, are they effectively liquidated too or can they become separated from the parent and continue to operate?

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JD Fortune

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By johnpaylor
10th Mar 2008 17:25

Subsidiaries are not affected
Liquidation of a holding company will not affect the status of the subsidiaries, but the holding company liquidator will effectively be in control. The liquidator will have to consider whether the subsidiary shareholdings can be sold off or otherwise disposed of, or whether the companies should also be liquidated or struck off. Usually this requires some research, as group companies often give cross guaranties, may well be in group VAT registrations, and will be creditors and/or debtors of other group companies. Normally a group company creditor will rank for dividend with any other creditor in the liquidation of the holding company (or of any fellow subsidiary). If the liquidator fails to deal with the subsidiary shareholdings, they will subsequently be subject to bona vacantia.

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