What is company liquidation?
Liquidation is a legal process in which a liquidator is appointed to 'wind up' the affairs of a limited company. At the end of the process, the company ceases to exist. Liquidation does not mean that the creditors of the company will necessarily get paid.
The purpose of liquidation is to ensure the company's affairs have been dealt with properly. This involves:
- completing, transferring or otherwise bringing to an end all company contracts (including employee contracts);
- ceasing the company's business;
- settling any legal disputes;
- selling any assets;
- collecting in money owed to the company;
- distributing any funds to creditors; and
- returning share capital to the shareholders if there is a surplus after repayment of all debts.
When this has been done, the liquidator will apply to have the company removed from the register at Companies House and dissolved. This means it ceases to exist.
For more details see our booklets:
Dealing with Debt – How to wind up a company that owes you money (DOC, 1.5 Mb)
Dealing with Debt – How to wind up your own company (DOC, 2.3 Mb)