What is a Liquidation?

Liquidation is in essence the death of a company. A liquidator is appointed to act instead of the Directors to wind up the company’s affairs.


There are two common types of insolvent liquidation: Compulsory Liquidation or Creditors Voluntary Liquidation. Contact us for any advice as to how we may assist you with a liquidation matter.


A solvent liquidation is known as a Members Voluntary Liquidation.

Members Voluntary Liquidation

A Members Voluntary Liquidation (“MVL”) is solvent liquidation when the creditors can anticipate and ought to obtain 100 pence in the £. An MVL can be undertaken entirely online.


The stages applicable to the MVL Procedure are set out in detail for you. Apply for an MVL.

Creditors Voluntary Liquidation

A Creditors Voluntary Liquidation (“CVL”) is one in which the directors will typically approach an IP to wind up the company’s affairs without any involvement by the court.


A Creditors Voluntary Liquidation is initiated by a shareholders’ resolution. It involves the end of the insolvent company and the distribution of the company’s assets to the creditors. This procedure enables directors to avoid  unsecured limited company debts that are not personally guaranteed. That is subject to the provisions associated with Wrongful Trading which is why it is so important to get advice at the earliest opportunity.


Directors may see voluntary liquidation as an appropriate exit from a stressful situation; whilst addressing all of the creditors, appropriately. If the limited company has liabilities that it cannot afford to pay and you would like to move on without the stress of the company’s debts hanging over your head, this type of business liquidation may be an appropriate option. Although it should be seen as a last resort, liquidating a company via this route can be considered a reasonable decision. Apply for a CVL online here.

About the Author:

Elliot Green
Elliot Green FCA FABRP Director and Licensed Insolvency Practitioner

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Compulsory Liquidation

A compulsory liquidation is when a court has issued a winding up order after a hearing of a winding up petition. Following which the Official Receiver (“OR”) is initially typically appointed as the Liquidator.


The OR is a government official who is employed by a government executive agency known as the Insolvency Service. Upon the making of a winding up order creditors can either leave matters with the OR to be the liquidator or alternatively attempt to appoint an Insolvency Practitioner “IP”) to be the liquidator instead of the OR.


There are two ways in which creditors can appoint an IP. If not less than 50% of creditors by value make a request of the OR then they can appoint an IP. Alternatively, creditors if they represent not less than 25% of creditors by value they can requisition a Decision Procedure to vote on the appointment of an IP to be the liquidator instead of the OR.