Guides

UK administration vs liquidation

In the UK, administration aims to rescue a company or sell its business under the protection of a moratorium, while liquidation ends the company's existence after its assets are realised.

• In administration the company is handed to an insolvency practitioner, the administrator, who draws up proposals to restore viability, agree a company voluntary arrangement or sell the business or assets.¹
• While the administrator is in charge, creditors cannot take legal action to recover their debts without the court's permission.¹
• In liquidation the company stops trading and is eventually struck off the Companies House register, so it ceases to exist.¹
• Compulsory liquidation follows a winding-up order by the court. The liquidator is either the Official Receiver, an officer of the court employed by the Insolvency Service, or an insolvency practitioner.^1,2
• A creditors' voluntary liquidation is started by the directors of an insolvent company rather than by a court order.¹
• In large compulsory liquidations the court can also appoint special managers to help the Official Receiver, as with Carillion in 2018, where PwC partners were appointed to keep contracts running.³

Sources

1. The Insolvency Service (GOV.UK), Options when a company is insolvent (11 February 2016)
2. The Insolvency Service (GOV.UK), Claim money back from a bankrupt person or company in compulsory liquidation: guidance for creditors (9 January 2025)
3. PwC UK, special managers, Carillion Group (special managers' information page) (27 October 2026)