What is Liquidation
Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. As company operations end, the remaining assets are used to pay creditors and shareholders, based on the priority of their claims.
Who can apply for Liquidation
Unsecured creditors can't take legal action against a company in liquidation or deal with its property unless they have permission from the Court or the Liquidator. Secured creditors can deal with the company's secured assets. The creditors may decide to appoint a receiver if one hasn't been appointed
How does Liquidation work
When a company goes into liquidation its assets are sold to repay creditors, the business closes down, and its name is removed from the register at Companies House. ... This is called a Members' Voluntary Liquidation (MVL). Insolvent liquidation occurs when a company cannot carry on for financial reasons.
What should I be aware of
Personal guarantees. If you've given personal guarantees to creditors regarding company debt repayments, you (or your guarantor) will be held legally liable for settling these amounts.