Liquidate or liquidation or liquidating

Your business will only be affected if your customer has gone into liquidation due to insolvency.In a members' voluntary winding up, the company's debts will all be paid.The company will stop doing business and employing people.The company won’t exist once it’s been removed (‘struck off’) from the companies register at Companies House.In this situation there is potential conflict between creditors (those to whom money is owed), as there will be insufficient assets for all creditors to be paid in full.The law attempts to maintain an equality between creditors, so the assets are distributed proportionately according to the size of each creditor's claim.

First, a liquidator is appointed, either by the shareholders or the court.

There is one term that is crucial to understanding liquidation:"insolvent".

A company is solvent if it can pay its debts when they fall due and insolvent if it can’t.

After these steps have been carried out, the company is formally dissolved.

The law classifies liquidations into two types: voluntary (which is by a shareholders' resolution) or compulsory (by a court order).