So far as an insolvent company is concerned there are two sorts of liquidation. A creditors' voluntary liquidation and a compulsory liquidation.
Creditors' voluntary liquidation
This occurs when the company calls a meeting of its shareholders to pass a resolution for the voluntary winding up of the company and this is usually followed immediately afterwards with a meeting of its creditors advising them that the company has been wound up.
A licensed insolvency practitioner will be appointed liquidator of the company and it will be the responsibility of the liquidator to deal with the claims of creditors, realise the assets of the company and generally wind up the company.
Compulsory liquidation will occur following the presentation of a winding up petition usually by a creditor who is owed money.
Unless the company can pay off the creditor, the Court will eventually make an Order for the winding up of the company.
In the first instance it is usually the Official Receiver who will take the office of liquidator but once the Official Receiver has made a preliminary re-assessment of the company's assets and liabilities, he will make a decision whether to appoint an insolvency practitioner to take his place as liquidator.
Once appointed the insolvency practitioner will take over from the Official Receiver and, as above, it is his responsibility to collect in the company's assets, deal with the claims of creditors, make distribution to creditors as appropriate and generally wind up the company.
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