company liquidation

Under UK law, there are three ways a company may enter liquidation, which in layman's terms is bankruptcy for companies. A members' voluntary liquidation is initiated by the shareholders (members) of a solvent the company who wish to cease trading the activities of the company voluntarily.

A creditors’ voluntary liquidation is commenced by the creditors of the company, where the company fails to pay its debts a as they fall due and payable. This avenue is made available to creditors to attempt to preserve some assets of the company so that may be recovered against in the liquidation.

A compulsory liquidation is commenced by an order of the Companies’ Court following a petition to the court for a winding up order. Following the order a registered insolvency practitioner is appointed to get in assets and distribute the proceeds to creditors.

Usage: The Companies Court was petitioned to place the company into liquidation.

Related Words: administrative receiver; administrative receivership; company; private company; public company; solvent; insolvent.