When you liquidate a company, its assets are used to pay off its debts. Any money left goes to shareholders. You’ll need a validation order to access your company bank account.

The company will stop doing business and employing people. The company will not exist once it’s been removed (‘struck off’) from the companies register at Companies House.

The liquidator is an authorised insolvency practitioner or official receiver who runs the liquidation process. As soon as the liquidator is appointed, they’ll take control of the business.

When you liquidate a company, its assets are used to pay off its debts. Any money left goes to shareholders. You’ll need a validation order to access your company bank account. If that money has not been shared between the shareholders by the time the company is removed from the register, it will go to the state

There are 3 types of liquidation:

1. creditors’ voluntary liquidation – your company cannot pay its debts and you involve your creditors when you liquidate it

2. compulsory liquidation – your company cannot pay its debts and you apply to the courts to liquidate it members’

3. voluntary liquidation – your company can pay its debts but you want to close it

When a liquidator is appointed, directors: no longer have control of the company or anything it owns cannot act for or on behalf of the company If you’re a director you must: give the liquidator any information about the company they ask for hand over the company’s assets, records and paperwork allow the liquidator to interview you, if they ask

Where liquidation signals the ultimate end of a company, administration on the other hand is often focussed on saving the business through a process of restructuring. Once a company is placed into administration, the appointed administrator takes control of the company and it is immediately granted a moratorium – a powerful ring-fence that halts any legal action being taken. 

This gives the administrator time and space to assess the company and devise a strategy to rescue the business should this be possible. This may involve a process of streamlining such as closing down non-performing areas of the business or unprofitable retail stores, or else by restructuring its debts to make them more affordable.