Company liquidation (UK)
Liquidation is a formal procedure for winding up a company under which a liquidator gathers and realises assets, settles or distributes against claims according to the statutory order, and completes the winding up. Members’ voluntary liquidation is used for a solvent company with the required declaration of solvency; creditors’ voluntary liquidation is used for an insolvent company. Compulsory liquidation follows a court winding-up order. The precise procedure, priorities and available funds depend on the circumstances and law.
Worked example
Members decide to close a solvent company and the directors make the required solvency declaration. An appointed liquidator realises the assets and deals with debts before any remaining funds are distributed to members under the applicable rules.
Common mistake
Assuming that every liquidation is compulsory or that a company must be insolvent for members’ voluntary liquidation.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | LW (ENG) | Direct | September 2026–June 2027 |