321Topic list Syllabus reference
1 What is liquidation? G1(a), G1(b)
2 Voluntary liquidation G1(a)
3 Compulsory liquidation G1(b), G1(c)
4 Differences between compulsory and voluntary
liquidationG1(a), G1(b)5 Saving a company: administration G1(d), G1(e)
eInsolvency and
administration
Introduction
A company in difficulty or in crisis (an insolvent company) basically has a
choice of two alternatives:
(1) To carry on with the business, using statutory methods to help remedy
the situation
(2) To stop
A company which is heading towards insolvency can often be saved, using a
variety of legal protections from creditors until the problem is sorted out.
Alternative 1 does not have to mean carrying on as if everything is normal. It
can mean seeking help from the court or a qualified insolvency practitioner
to put a plan together to save the company and get it out of its bad financial
position.
Unfortunately, many companies cannot be saved, and the members and
directors are forced to take alternative 2, to stop operating the business
through the company. Liquidation, sometimes called 'winding up', is when a
company is formally dissolved and ceases to exist.
The Insolvency Act 1986 applies to this chapter unless otherwise stated.