What is the difference between administration and liquidation?

Administration aims to rescue the company or get a better result for creditors while trading continues; liquidation winds the company up and sells its assets to pay creditors. One is a rescue tool, the other an ending. An administrator takes control to rescue the company as a going concern, sell it, or achieve a better return for creditors than an immediate winding-up. It gives breathing space and a moratorium on most creditor action while a plan is worked out.

What is the difference between administration

2 min read

AdministrationRescue attempt

LiquidationWinding up

TradingOnly in administration

Administration

An administrator takes control to rescue the company as a going concern, sell it, or achieve a better return for creditors than an immediate winding-up. It gives breathing space and a moratorium on most creditor action while a plan is worked out.

Liquidation

Liquidation ends the company. A liquidator realises the assets and distributes proceeds to creditors in legal priority — secured lenders and preferential claims first. Directors’ conduct is reviewed. Neither route makes you personally liable without a guarantee or misconduct.

What it means for you

Credicorp lends to your company, not to you personally, and takes no personal guarantee. See business loans or apply online.

Frequently asked questions

Which is better, administration or liquidation?

Administration is a rescue tool that can preserve the business or jobs; liquidation closes the company. Which fits depends on whether the business is viable.

Am I personally liable in either?

Not merely by the process. Personal liability arises from a personal guarantee or director misconduct such as wrongful trading, not from insolvency itself.