Liquidation and administrative liquidation are often confused, although they differ considerably in their grounds, governing law and procedure. Company liquidation is governed by the Companies Law and its Implementing Regulations, which provide for voluntary or judicial liquidation. The partners may agree to liquidate the company by mutual consent. If they cannot agree, a partner may bring an action for judicial liquidation where there are grounds that persuade the court to order it.
The court orders liquidation on the basis that the company's assets are sufficient to pay its debts. This is the criterion distinguishing liquidation from administrative liquidation: in liquidation, the company has the financial solvency needed to wind up and pay its debts. If the assets or solvency are insufficient, the liquidation application is rejected and the matter is referred to administrative liquidation under the Bankruptcy Law.
Administrative liquidation is one of the procedures provided for under the Bankruptcy Law. If assets or solvency are insufficient, the partners or another person with an interest and standing may apply to the competent Commercial Court for the company's administrative liquidation. If the application is granted, bankruptcy proceedings begin in accordance with the Law.
A judicial principle is a general substantive or procedural rule established by the Supreme Court and taken into account when cases are considered and judgments and decisions are issued. ن ع ع: (2/أ)، (29/8/1434).
