Liquidation – Winding up a company

When I company is wound up, it is put into liquidation – “winding up” is simply another way of saying liquidation.

Winding up your company is a way of dealing with corporate debts that you cannot pay when they become due. However, not all companies which are wound up are insolvent – some can afford to pay all their debts with their assets.

When a company is wound up it is brought to an end, stops trading and ceases to exist. Any assets and property of the company are redistributed.

Remember: Not all companies being wound up are insolvent.

Types of winding up

There are three types of winding up

• A members’ voluntary winding up is where the directors or shareholders of a company decide to put it into liquidation and the company is solvent (there are enough assets to pay all the company’s debts).
• A creditors’ voluntary winding up is where the directors or shareholders of a company decide to put the company into liquidation and the company is insolvent (there are not enough assets to pay all the company’s debts).
• A compulsory winding up is where the court makes a winding-up order on the petition of an appropriate person, for example, a creditor.

More information

• Liquidation – What is liquidation?
• Liquidation – The liquidation process
• Liquidation – Voluntary and involuntary liquidation
• Liquidation – The advantages of liquidation
• Liquidation – The disadvantages of liquidation
• Liquidation – The alternatives to liquidation
• Liquidation – I am owed money by a company in liquidation
• Liquidation – Insolvency and liquidation