What does liquidation mean and what does a liquidator actually do?

What does liquidation mean and what does a liquidator actually do?

The process of liquidation is when a company is either at or near to the end of its life and the remaining assets need to be liquidated for distribution to creditors and shareholders.  The role of the liquidator is to maximise the realisation of assets of the company.

There are a number of ways which assets can be realised this can be by a sale of the assets or through an investigation into the business and affairs of the company (which can be undertaken by our forensic insolvency division) whereby a number of transactions can be overturned if they were not in the best interests of the company i.e. paying an overdrawn directors loan account ahead of the other creditors, this is known as a preference payment.

Once the assets have been realised and sufficient cash has accumulated then the job of the liquidator is agree all creditors’ claims and to pay dividends accordingly.

Ultimately a liquidation can be solvent or insolvent as the purpose of the liquidation is to clean up all the affairs of the company make the necessary distributions to creditors and/or shareholders then apply for dissolution of the company.

If you want to know more information on how to liquidate a company please do not hesitate to Steven Wiseglass.

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