Corporate liquidation is the process of winding up the affairs of the business by the realization of its non-cash assets, settlement of its liabilities or debts and dissolution of the remaining assets of the company to its owners.
The statement of affairs is the initial report prepared by the receiver as of a given point in time. This statement is made under liquidatingconcern. Assets are reported under their estimated realizable values and classified as pledged or not.
Kinds of free assets:
Assets not pledged
Excessamount of assets erv pledged to fully secured liabilities
The statement of Realization and Liquidation shows the actual activity of the trustee in liquidating the debtor's estate. It provides information on how the trustee realized the assets of the company and liquidate the obligation of the company.
The purpose of SORAL is to provide the bankruptcy court and interested creditors of the accomplishments of the trustee.
The SORAL is composed of three sections:
Assets
Liabilities
Revenue and expense
Supplementary charges - represent the expenses incurred and paid during the period
Supplementary credits represents revenue earned during the period
If the debit balance is > the credit balance in SORAL, then it is a net loss.
If the credit balance is > the debit balance in SORAL, then it is a net gain