Liquidation vs Receivership
Liquidation and receivership are different processes with different goals — knowing which one applies tells you what to expect as a creditor.
What you'll learn
- What a liquidator does and why
- What a receiver does and who appoints them
- How the two processes can overlap
- What each means for an unsecured creditor
6 min read
What liquidation does
Liquidation, or winding up, is the process of ending a company's existence. A liquidator collects and sells the company's assets, investigates its affairs, and distributes available funds to creditors in the order set by law before the company is deregistered. Liquidation looks at the whole company and all of its creditors, not just one lender's interests.
What receivership does
A receiver is usually appointed by a secured creditor — often a bank — to take control of and sell specific assets that the security covers. The receiver's job is primarily to recover what the appointing lender is owed from those assets. Receivership is narrower in focus than liquidation: it is about realising particular secured property, not winding up the whole company.
How they overlap
The two can run at the same time. A secured lender may appoint a receiver over charged assets while a liquidator handles the broader winding up. Where this happens, secured claims are generally dealt with first from the secured assets, and the liquidation addresses what remains for the wider body of creditors.
What it means for you
As an unsecured trade creditor you typically rank behind secured creditors and certain priority claims, so recovery can be limited in both processes. That is exactly why holding security where appropriate, registering on the PPSR, and acting early all matter. Where a debt is still live, referring it promptly protects value before any appointment.
A note on advice
This is general information only, not legal, financial, or tax advice. Priorities and outcomes depend on the facts, so seek qualified advice about your specific position.
Key takeaways
- Liquidation winds up the whole company for all creditors.
- Receivership realises specific assets, usually for a secured lender.
- The two processes can run at the same time.
- Unsecured creditors often rank low, so security and early action matter.
Frequently asked questions
Which is worse for me as a supplier?
Neither is automatically better; your outcome depends on your ranking and the assets available. Unsecured creditors often recover little in both. General information only.
Can a company be in both at once?
Yes. A receiver may act over secured assets while a liquidator handles the broader winding up.
Does registering on the PPSR help?
It can improve your position over certain goods or property, but registration must be done correctly and in time. Seek advice.
Knowledge is good. Getting paid is better.
Merion's team recovers what you're owed — commission-only, no upfront fee.