What is liquidation?

Liquidation is the process of winding up a company’s financial affairs.

Typically, a company is placed into liquidation because the company cannot pay all of its debts (i.e. it is insolvent). Liquidation is a formal process to dismantle a company’s affairs and it can also provide relief to those running the company by placing company control into the hands of a third party (a liquidator). The liquidator then deals with the company’s operations and its debts.