Liquidation

Liquidation is the formal winding up of a company, where a liquidator is appointed to realise its assets and distribute proceeds to creditors according to a statutory order of priority, generally ending with the company being deregistered. It is initiated either by creditors, where a company cannot pay its debts as they fall due, or voluntarily by shareholders and directors, and directors facing an insolvent company should get advice promptly given the personal exposure that can arise from continuing to trade while insolvent.⚠ For finance purposes, a company's own liquidation ends its ability to borrow, but directors and related entities emerging from a liquidated company's collapse are frequently able to access finance again, particularly through specialist funds and private lenders, once they can demonstrate a clean subsequent trading history and a clear account of what happened. A new venture connected to a director from a prior liquidation is usually assessed on its own merits, security and exit, rather than automatically excluded on the strength of that history alone.

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