Liquidation is one of the forms of "insolvency" in the Courts of England and Wales and is used when the other methods of corporate recovery have failed. There are two forms of Liquidation - compulsory (or Court ordered winding-up) and voluntary (creditors or members winding-up).

The purpose of a liquidation is to realise the assets of the company in order that the creditors of the company can be paid off.

Although the initial principle of liquidation was that the creditors would be paid off pari passu, i.e. all creditors would receive an equal share of the assets of the company in accordance with the debt they were owed, there are now a number of classes: debenture or fixed charge holders, preferential creditors, floating charge holders and unsecured creditors.

Informally, liquidation may be use to refer to any rapid conversion of an asset into cash.

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