If a company is placed into compulsory liquidation, the Official Receiver (appointed by the Court) takes control of the company and sells the business and its assets to pay back creditors.
The other type of liquidation is called creditors voluntary liquidation (CVL). As the name suggests, creditors appoint a licensed insolvency practitioner to liquidate the company, however directors can initiate proceedings by meeting with shareholders and then creditors to discuss the situation.
The new Insolvency Service guide includes details on ways to claim money back, how assets are distributed to creditors as well as what to expect at a creditors meeting. View the full guide here.
We’ve also produced a useful infographic for creditors to show who gets paid and in what order when a company goes into administration or liquidation: http://www.companyrescue.co.uk/directors-guides-insolvency/creditors-priority.
If you're a director and considering liquidating your company, please view our expert 50 page guide to Creditors Voluntary Liquidation.