It allows for fair distribution of the company’s assets among the shareholders. This is unlike the past where the creditor rushed to liquidate as many assets as possible without considering the liabilities of the company to its employees.
It removes a loss making business from the industry. This is good as it eliminates the possibility of the company continuing to operate and incurring more debts.
It allows for proper investigation as to the cause of the problem. It identifies any wrong doing and holds those responsible to account.