What are the different types of liquidation that I need to be aware of?

Once the decision is made that a struggling business must enter liquidation, the process can be surprisingly quick and always represents a large degree of closure for those involved.


Liquidation remains one of the most common routes for an insolvent company to take due to the largely uncomplicated nature of the process.


Simple structure


The relatively simple structure to liquidation is greatly appealing to shareholders that are keen to avoid a long and drawn-out process. The key assets will be sold off and distributed accordingly to shareholders and creditors.


The company is then completely dissolved and will no longer be able to trade in the vast majority of cases. But it is important to note that there are different types of liquidation:


Insolvent liquidation


Insolvent liquidation will deal with the realization and distribution of assets to creditors.


Members’ voluntary liquidation


This is the liquidation of a solvent entity and it can be a feasible option when a larger group is completely overhauled and subsidiaries of the group need to be tidied up or if the shareholders involved are keen to extract their investments and bring a clean end to the process.


Contacting an insolvency specialist


As stated above, liquidation can be a sensible option if those involved are keen to bring an efficient end once a company becomes insolvent (or for other reasons if MVL). In any case involving liquidation, it is vitally important that competent and experienced insolvency practitioners, such as Moorfields, are appointed to oversee the process.


A restructuring and insolvency advice specialist such as Moorfields can also assist business leaders, financial directors and stakeholders to deliver practical and sustainable solutions for their business. They can also offer insightful advice regarding how to proceed in the future.


If you would like to have a free no obligation chat with one of our advisers please call us on 0207 186 1143.

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