Q & A
Answers When You Need Them Most
Facing liquidation can be overwhelming, but you don’t have to go through it alone. Here you’ll find clear, straightforward answers to the most common questions, so you can make informed decisions with confidence.
Questions and Answers
What is liquidation?
Liquidation is the legal process of closing a company, selling its assets, and distributing the money to creditors before the company is removed from the Companies Register.
What’s the difference between liquidation and bankruptcy?
Bankruptcy applies to individuals, while liquidation applies to companies.
Do I have to stop trading immediately?
Yes. Once liquidation starts, the company must stop trading unless the liquidator decides otherwise.
Can I liquidate my company voluntarily?
Yes. A shareholders’ resolution can start a voluntary liquidation if the company is insolvent.
What’s the difference between voluntary and compulsory liquidation?
Voluntary liquidation is initiated by the company; compulsory liquidation is ordered by the court, usually after a creditor applies.
How long does liquidation take?
It can take anywhere from a few months to a few years, depending on the complexity of the company’s affairs.
Will I lose my personal assets?
Generally, no — unless you’ve given personal guarantees or traded while insolvent.
What happens to employees in liquidation?
Employees are usually made redundant, but they are priority creditors for unpaid wages, holiday pay, and certain entitlements.
What happens to company debts?
The liquidator sells company assets to repay creditors. Any unpaid debts after liquidation are generally written off, unless personally guaranteed.
Do I need to attend court?
Not for voluntary liquidation. For compulsory liquidation, you may need to attend if you wish to oppose it.
Can I be a director again after liquidation?
Yes, unless you are banned by the court or the Registrar of Companies for serious breaches.
What’s the role of the liquidator?
The liquidator takes control of the company, sells its assets, pays creditors in the legal order, and investigates the company’s affairs.
What are my duties as a director in liquidation?
You must cooperate fully, hand over records, and not dispose of company assets.
What if I can’t afford a liquidator?
Some liquidators may take on the case if there are enough assets to cover their fees. In other cases, you may need to seek court assistance.
Can I choose my liquidator?
Yes, in voluntary liquidation you can choose your own licensed insolvency practitioner.
Will liquidation affect my credit rating?
Liquidation is recorded publicly and may affect your ability to get credit as a director, but it won’t appear on your personal credit file unless you’ve given guarantees.
Can the liquidator investigate my personal finances?
Only if there’s evidence you’ve misused company funds or breached director duties.
What happens to ongoing contracts and leases?
Most contracts are terminated unless the liquidator decides they are valuable to continue.
Can I buy back my company’s assets in liquidation?
Yes, but only through an open and fair sale process overseen by the liquidator.
What should I do before starting liquidation?
Seek professional advice early. The sooner you act, the more options you have to protect yourself and maximise returns for creditors.