Jurisdiction(s):
United Kingdom

Key definition

Liquidation definition

What does Liquidation mean? Liquidation (statutory term: winding up) is the formal process for closing a company, under which a liquidator takes control, stops or sells the business, collects and realises assets, adjudicates creditor claims and distributes proceeds according to statutory priority, before dissolution. It is used both on insolvency (to repay creditors) and, in a solvent members’ voluntary liquidation (MVL), to return surplus to shareholders. In England & Wales and Scotland, liquidation is governed principally by the Insolvency Act 1986 and associated Rules. The main routes are compulsory liquidation (winding up by the court), creditors’ voluntary liquidation (CVL) and MVL. In Northern Ireland,...

United States Bankruptcy Chapter 7 Liquidation: Eligibility, Procedure, Means Test, Trustee and Estate, Discharge, and Closure (Archived)

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

ARCHIVED : This Practice Note has been archived and is no longer maintained.

Updated for the UK by the Practical Guidance Team. Chapter 7 offers debtors a fresh beginning after setback. That restart differs for an individual and a company under Chapter 7. In particular, only an individual debtor is eligible for a discharge of debts in a Chapter 7 case—there is no equivalent discharge available to business debtors in a Chapter 7 proceeding (see 11 U.S.C. § 727(a)(1); Fed. R. Bankr. P. 4004(c)(1)(A)). Business debtors instead achieve relief from obligations through winding up or dissolution (see Collier on bankruptcy P 727.01). Distinct from proceedings under other parts of the Bankruptcy Code, a Chapter 7 case places a trustee in charge of the debtor’s property, who sells the assets and allocates the proceeds to creditors pursuant to the Code’s priority and distribution framework. Prospective debtors should recognise that seeking Chapter 7 relief can lead to the forfeiture of assets. Owing to this approach, Chapter 7 bears the label ‘liquidation’...

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Web page updated on 22/05/2026

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