Liquidation

Liquidation is the process of winding up a company's affairs by realising its assets, paying its debts (so far as they can be paid), and distributing any surplus to members before the company is dissolved. There are three types: compulsory liquidation (by court order), creditors' voluntary liquidation (CVL), and members' voluntary liquidation (MVL, for solvent companies).

In practice

In compulsory liquidation, the Official Receiver is appointed as liquidator initially and may appoint an insolvency practitioner to act. In a CVL, creditors nominate the liquidator. The liquidator has wide powers to investigate the company's affairs, recover assets, pursue antecedent transactions (preferences and transactions at an undervalue), and make distributions. All enforcement action is stayed once a winding-up order is made.