What is Liquidation?
Liquidation is a legal process in which a Liquidator is appointed to wind up the affairs of a limited company. At the end of the process the company ceases to exist.
It is important to note that Liquidation does not mean that the company's creditors will get paid. The purpose of Liquidation is only to ensure that the company's affairs have been dealt with properly.
This involves:
- Ensuring all company contracts (including employee contracts) are completed, transferred or otherwise brought to an end
- Ending the company's business
- Settling any legal dispute,
- Selling any assets
- Collecting money owed to the company
- Distributing any money to creditors and returning share capital to the shareholders (any surplus funds can be distributed to shareholders), and
- Applying to have the company removed from the register at Companies House and dissolved, which means it ceases to exist.
Types of Liquidation
There are three types of Liquidation:
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