§ 2004 Corporate Asset Distribution Rules

• •All known debts and liabilities must be paid or set aside first.
• •Any remaining assets are given to shareholders based on their rights and preferences.
• •If a court is supervising the winding up, distribution must wait until the claim period ordered by the court ends.

A local bakery decides to close, pays all its suppliers and loans, and then gives the remaining cash to the two owners. If the closure is ordered by a court, the owners wait until the court‑set deadline for any other claims before receiving the money.

The bakery follows the rule: debts are paid first, then the leftover money is split between the owners. Because the court is involved, they wait for the claim period to end before the split.