What typically occurs during the process of winding up a company?

During the winding up process, the primary objective is to settle the financial obligations of the company and distribute any remaining assets. This involves a systematic approach where the company's assets are collected, sold, and used to pay off creditors first. Once all liabilities have been settled, any residual assets may then be distributed among the shareholders in accordance with their rights and the company’s articles of association.

This process is crucial because it ensures that creditors are paid before any distribution is made to the shareholders, adhering to the principles of fairness and transparency in the settlement of the company's debts.

The other options reflect scenarios that do not align with the winding up process. Granting additional time to pay debts typically involves approaches like negotiation or restructuring rather than winding up. Continuing to trade while in the process of winding up contradicts the fundamental purpose of this process, which is to cease operations and focus on liquidating assets. Lastly, restructuring to avoid liquidation is a viable business strategy but is distinct from winding up, which indicates that the company will not continue its operations.