chapter  17
16 Pages

Accounts and returns

Liquidations fall into two basic categories: compulsory by court order and voluntarily initiated by the members of the company. Voluntary liquidations are of two types: members' voluntary winding up under the control of the members, where the directors have sworn a statutory declaration of solvency, and creditors' voluntary winding up. It is the function of the liquidator to realise the company's property for cash during the liquidation. The liquidator takes into his custody and places under his control all the company's property and things in action. If no statutory declaration of solvency is sworn then the liquidation proceeds as a creditors' voluntary winding up. Section 214 of the Insolvency Act 1986 extends liability to directors or shadow directors who should have known or ought to have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation.