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The difference between administration and liquidation

The main differences between administration and liquidation can be summarised as follows:

  • Administration is mostly a voluntary process
  • A company in administration can continue to trade
  • The purpose of entering administration is to try and rescue an insolvent company
  • The administration process halts any legal action intended by creditors
  • A company in administration can be broken up and sold off, and sell some of its assets, to satisfy its debts
  • Administration affords the opportunity to safe staff
  • A company in administration can be sold in its entirety as a going concern.
  • Liquidation can be voluntary or compulsory
  • A liquidated company must cease trading
  • The purpose of liquidation is to close down an insolvent company
  • The liquidation process is in itself legal action brought about by the company's creditors
  • Only assets of a liquidated company can be sold to satisfy its debts
  • A liquidated company can no longer employ staff
  • A liquidated company cannot be sold as it ceases to exist.