The following Property practice note provides comprehensive and up to date legal information covering:

  • Insolvency—liquidation
  • Forms of liquidation
  • The official receiver
  • Effect of appointment
  • Liquidator's powers
  • Contract for sale drafting considerations
  • The parties
  • Liquidator as seller
  • Excluding liability
  • Executing the transfer
  • More...

Coronavirus (COVID-19): the coronavirus pandemic has caused the UK to expedite new insolvency provisions, both of a temporary and permanent nature. For news and guidance as to the implications from a property perspective see: Coronavirus (COVID-19)—implications for property — Property Insolvency.

Forms of liquidation

'Liquidation' or 'winding up' is the process by which a company is brought to an end. When a company is liquidated its business is terminated, although it may need to be carried on temporarily as part of the winding-up process (eg to enforce any valuable contracts), its assets are realised and the proceeds are distributed to those entitled.

Liquidation may be either insolvent or solvent, and may be commenced:

  1. by court order ('compulsory liquidation'), or

  2. out of court (‘voluntary liquidation’)

A voluntary liquidation of:

  1. an insolvent company is a creditors' voluntary liquidation ('CVL')

  2. a solvent company is a members' voluntary liquidation ('MVL') and is dependent on a declaration of solvency by the directors

The parties to whom a liquidator is answerable depends on the type of liquidation:

  1. MVL—the liquidator must primarily consider the interests of the shareholders who have appointed him

  2. CVL—the interests of creditors come first; a creditors' meeting is required to be held within 14 days of the winding-up resolution at which the creditors have the right to appoint the liquidator and to establish a liquidation committee to oversee the conduct of the

Popular documents