What happens when a company enters liquidation

Liquidation in one sentence

A liquidator (another type of insolvency practitioner) winds up the company, sells its assets, pays creditors what they can from the proceeds, and dissolves the company. Shareholders are last in line, usually they receive nothing.

Unlike administration, liquidation is not designed to rescue the business. Buyers typically acquire assets (stock, plant, vehicles, IP, customer lists) rather than the company itself.

Three types you will see

Creditors' voluntary liquidation (CVL)

Directors/shareholders decide the company is insolvent and appoint a liquidator voluntarily. This is the most common route for insolvent trading businesses. Assets are marketed , sometimes quickly, to pay creditors.

Buyer relevance: high. CVLs often produce asset sales, clearance stock, and specialist equipment at distressed prices.

Compulsory liquidation

A court orders the company wound up, usually after a creditor petitions (often HMRC or a major supplier). A liquidator is appointed by the court.

Buyer relevance: moderate. Assets can still be sold, but the process may be slower and more constrained. You will still see Gazette notices when the liquidator is appointed.

Members' voluntary liquidation (MVL)

Used when the company is solvent: shareholders want an orderly wind-down and tax-efficient distribution of surplus cash. Not a distress sale.

Buyer relevance: low for bargain hunters. Salvy deprioritises MVLs in daily analysis because there is rarely an asset fire sale. See our methodology for how we filter these.

Timeline: what happens after the notice

1. Liquidator appointed. Published in The Gazette, the same public record Salvy monitors daily. The notice identifies the company and the insolvency firm.
2. Company ceases trading (usually, unless a brief trading period is needed to sell stock).
3. Assets identified and valued. The liquidator prepares an inventory: property, equipment, vehicles, stock, IP, debtors. Some assets may be subject to retention-of-title claims by suppliers.
4. Assets marketed and sold. Sales may be private treaty, auction, or tender. Serious buyers register interest with the liquidator's office, the contact details are in the Gazette notice and on Companies House insolvency records.
5. Creditors paid in priority order. Secured creditors first, then preferential (including certain employee claims), then unsecured creditors. Anything left goes to shareholders, rarely much in insolvency.
6. Company struck off. Once assets are realised and distributions made, the company is dissolved at Companies House.

What buyers can actually purchase

• Stock and inventory: often sold at discount; check condition and ownership
• Plant and machinery: verify title; watch for hire-purchase or leasing claims
• Intellectual property: trademarks, domains, software; confirm registration and encumbrances
• Customer lists and goodwill: harder to value; often sold with trade name where permitted
• Property: freehold or leasehold; lease assignments need landlord consent

You are generally not buying the company or its liabilities unless you negotiate a specific structure (rare in liquidation). That is the appeal, but also why due diligence focuses on clean title to assets.

How to find liquidation opportunities

New liquidation appointments appear on The Gazette every working day. Manually scanning is slow; most asset buyers rely on a mix of Gazette alerts, insolvency firm relationships, and auction houses.

Salvy publishes a daily shortlist of the top liquidations alongside the top administrations , analysed for asset-buying interest using Companies House data. Browse today's report or subscribe for the email digest. Individual company profiles live at permanent URLs like past reports show.

Due diligence for asset deals

• Title: does the company actually own what it is selling?
• Retention of title: suppliers may reclaim stock they never fully sold
• Condition: inspect before you bid; distressed sales are usually sold as seen
• Warranties: expect limited warranties from a liquidator; price reflects the risk
• VAT and apportionment: get tax advice on asset purchase treatment

Administration vs liquidation: quick comparison

• Administration: rescue or better realisation; going-concern sales possible; moratorium protects from creditor action
• Liquidation: wind-down; asset sales only; company ceases to exist
• Timing: a company may go from administration into liquidation if rescue fails

If you are looking for a trading business with staff and contracts, focus on buying out of administration. If you want kit, stock, or IP at asset level, liquidation is your hunting ground.