Liquidation—an introductory guide


Published by a ³ÉÈËÓ°Òô Restructuring & Insolvency expert
Practice notes

Liquidation—an introductory guide


Published by a ³ÉÈËÓ°Òô Restructuring & Insolvency expert

Practice notes
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Process and effect

'Liquidation' or 'winding-up' is the process by which the affairs of a company and the company’s existence are brought to an end. When a company is liquidated:

  1. •

    its business is terminated, although it may need to be carried on temporarily as part of the winding-up process (eg to enforce any valuable contracts)

  2. •

    its assets are realised (brought into a liquid form), and

  3. •

    the proceeds are distributed to those entitled

A liquidator must fulfil this function following the duties imposed and powers granted to them under the Insolvency Act 1986 (IA 1986) and the Insolvency (England and Wales) Rules 2016, SI 2016/1024. For more information, see Practice Note: Role, powers, functions and duties of a liquidator.

Forms of liquidation

Liquidation may be either:

  1. •

    insolvent (where a company is unable to pay its debts or its liabilities are greater than its assets), or

  2. •

    solvent

Liquidation may be commenced:

  1. •

    by

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Liquidation definition
What does Liquidation mean?

The process by which a company's assets are realised for the benefit of its creditors.

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