What is the difference between Administration and Liquidation?

The difference between administration and liquidation is that administration is a company rescue process which seeks to save an insolvent company and allow it to become viable again; whereas liquidation is the process of closing down an insolvent company.

The administration process is used if a company is insolvent but it has the potential to be a viable business again. An insolvency practitioner is appointed as an administrator to take control of the company, rescue it from insolvency and maximise the interests of its creditors. This can involve restructuring the organisation by reducing staff numbers and closing under-performing areas of the business; it can also include the continuation of trading, selling business assets and selling the business in part or as a whole.

The liquidation process signals the end of a company. If a company is insolvent and has no way to pay back its debts, then an insolvency practitioner is appointed as a liquidator. The liquidator will take control of the company, sell off assets to raise’ liquid’ cash which can be used to pay debts to creditors, and ultimately shut down the company. Liquidation can be voluntary, if the directors decide to close their insolvent company, or it can be compulsory when ordered by a court.

More information and insolvency advice

If your company is facing insolvency, it can be a very stressful and challenging time. Our aim is to take the stress from your shoulders, advise you, and guide you through the insolvency process.

Contact us for more information and advice on company administration and liquidation. Our insolvency practitioners are available to answer any questions that you may have and advise you on the best course of action for your business. We can offer free advice over the phone, via email or live chat. We can visit you at your office with absolute confidentiality to discuss your situation and advise you on your options.