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Apart from petitions by the company or creditors, an administrator has the power to move a company into liquidation, carrying out an asset sale, if its attempts at rescue come to an end.[145] If the liquidator is not an administrator, he is appointed by the court usually on the nomination of the majority of creditors.[146] The liquidator can be removed by the same groups.[147] Once in place, the liquidator has the power to do anything set out in sections 160, 165 and Schedule 4 for the purpose of its main duty. This includes bringing legal claims that belonged to the company. This is to realise the value of the company, and distribute the assets. Assets must always be distributed in the order of statutory priority: releasing the claims of fixed security interest holders, paying preferential creditors (the liquidator's expenses, employees and pensions, and the ring fenced fund for unsecured creditors),[148] the floating charge holder, unsecured creditors, deferred debts, and finally shareholders.[149] In the performance of these basic tasks, the liquidator owes its duties to the company, not individual creditors or shareholders.[150] They can be liable for breach of duty by exercising powers for improper purposes (e.g. not distributing money to creditors in the right order,[151]) and may be sued additionally for negligence.[152] As a person in a fiduciary position, he may have no conflict of interest or make secret profits. Nevertheless, liquidators (like administrators and some receivers) can generally be said to have a broad degree of discretion about the conduct of liquidation. They must realise assets to distribute to creditors, and they may attempt to maximise these by bringing new litigation, either to avoid transactions entered into by the insolvent company, or by suing the former directors.
Increasing assets
Litigation by administrators and liquidators may avoid unfair transactions or preferences, and make former directors pay for wrongdoing. But because of a cautious culture, accountants bring few claims.

If a company has gone into an insolvency procedure, one of the objectives of the administrator or liquidator is to increase the assets that are available to distribute to creditors. To ensure fairness and to treat creditors with similar claims equally, UK law creates significant exceptions to some fundamental private law doctrines. The freedom to contract for any consideration, adequate or not,[153] is curtailed as transactions for an undervalue, or anything unregistered or after presentation of a winding up petition may be avoided.[154] The freedom to contract for any security interest[155] is restricted, as a company's attempt to give an undue preference to one creditor over another, particularly a floating charge for no new money, or any charge that is not registered can also be unwound.[156] Furthermore, particularly since the Cork Report's emphasis on increasing the accountability of company directors, practitioners may sue directors by summary procedure for breach of duties, especially negligence or conflicts of interest. Encroaching on limited liability and separate personality,[157] a specific, insolvency related claim was created in 1986 named wrongful trading, so if a director failed to put a company into an insolvency procedure, and ran up extra debts, when a reasonable director would have, he can be made liable to contribute to the company's assets. Any intentional wrongdoing and fraud is always dealt with strictly, yet a variety of claims exist without any such proof so as prevent unjust enrichment of selected creditor at others' expense and deter wrongdoing.
Voidable transactions

Receivership sources
Main articles: Receivership, English property law, and Mortgages in English law

For businesses where floating charges were created before 2003, and in eight types of corporate insolvencies in the Insolvency Act 1986, sections 72B to 72GA, an older procedure of administrative receivership remains available. These companies are capital market investments; public-private partnerships with step in rights; utility projects; urban regeneration projects; large project finance with step in rights;[121] financial market, system and collateral security charges; registered social landlords; and rail and water companies. Until the Enterprise Act 2002, creditors who had contracted for a security interest over a whole company could appoint their own representative to seize and take a company's assets, owing minimal duties to other creditors. Initially this was a right based purely in the common law of property. The Law of Property Act 1925 gave the holder of any mortgage an incidental power to sell the secured property once the power became exercisable. The receiver was appointable and removable only by, and solely the agent of, the mortgagee.[122] In companies, secured lenders who had taken a floating charge over all the assets of a company also contracted for the right upon insolvency to manage the business: the appointed person was called a "receiver and manager" or an "administrative receiver".[123] The Insolvency Act 1986 amended the law so as to codify and raise the administrative receiver's duties. All receivers had a duty to keep and show accounts,[124] and administrative receivers had to keep unsecured creditors informed, and file a report at Companies House.[125] By default, he would be personally liable for contracts that he adopted while he ran the business.[126] For employment contracts he could not contract liability if he kept employees working for over 14 days.[127] However, the administrative receiver could always be reimbursed for these costs out of the company's assets,[128] and he would have virtually absolute management powers to control the company in the sole interest of the floating charge holder.

The basic duty of the receiver was to realise value for the floating charge holder, although all preferential debts, or those with priority, would have to be paid.[129] For other unsecured creditors, the possibility of recovering money was remote. The floating owed no duty to other creditors with regard to the timing of the appointment of a receiver, even if it could have an effect on negotiations for refinancing the business.[130] It was accepted that a receiver had a duty to act only for the proper purpose of realising debts, and not for some ulterior motive. In Downsview Nominees Ltd v First City Corp Ltd,[131] a company had given floating charges to two banks (Westpac first, and First City Corp second). The directors, wishing to install a friendly figure in control asked Westpac to assign its floating charge to their friend Mr Russell, who proceeded to run the business with further losses of $500,000, and refused to pass control to First City Corp, even though they offered the company discharge of all the money owed under the first debenture. The Privy Council advised that Mr Russell, as administrative receiver, had acted for an improper purpose by refusing this deal. A further case of breach of duty occurred in Medforth v Blake[132] where the administrative receiver of a pig farm ignored the formers owner's advice on how to get discounts on pig food of £1000 a week. As a result, larger debts were run up, and Sir Richard Scott VC held this was a breach of an equitable duty of exercising due diligence. However, a more general duty to creditors was tightly constrained, and general liability for professional negligence was denied to exist. In Silven Properties Ltd v Royal Bank of Scotland[133] a receiver of a property business failed to apply for planning permission on houses that could have significantly raised their value, and did not find tenants for the vacant properties, before selling them. It was alleged that the sales were at an undervalue, but the Court of Appeal held that the receiver's power of sale was exercisable without incurring any undue expense. Everything was subordinate to the duty to the receiver to realise a good price.[134] In this respect, an administrator is not capable of disregarding other creditors, at least in law. One of the reasons for the partial abolition of administrative receivership was that after the receiver had performed his task of realising assets for the floating charge holder, very little value was left in the company for other creditors. Ordinarily, once the receiver's work was done, the company would go into liquidation.
Liquidation
Main articles: Liquidation and Chapter 7, Title 11, United States Code
Disused assets of a liquidating business require buyers, but ultimately the government bears the cost of cleaning up. Battersea Power Station was decommissioned by the CEGB in 1975, and a series of private buyers since 1986 have abandoned their projects or gone into administration.

Liquidation is the final, most frequent, and most basic insolvency procedure. Since registered companies became available to the investing public, the Joint Stock Companies Winding-Up Act 1844 and all its successors contained a route for a company's life to be brought to an end. The basic purpose of liquidation is to conclude a company's activities and to sell off assets (i.e. "liquidate", turn goods into "liquid assets" or money) to pay creditors, or shareholders if any value remains. Either the company (its shareholders or directors) can iniate the process through a "voluntary liquidation", or the creditors can force it through a "compulsory liquidation". A voluntary liquidation begins if the company's members vote to liquidate with a 75 per cent special resolution.[135] If the directors can make a statutory declaration that the company is solvent the directors or shareholders remain in control,[136] but if the company is insolvent, the creditors will control the voluntary winding up.[137] Otherwise, a "compulsory liquidation" may be initiated by either the directors, the company, some shareholders or creditors bringing a petition for winding up to the court.[138] In principle, almost any member (this is usually shareholders, but can also be anyone registered on the company's member list) can bring a petition for liquidation to begin, so long as they have held shares for over six months, or there is only one shareholder.[139] In Re Peveril Gold Mines Ltd[140] Lord Lindley MR held that a company could not obstruct a member's right to bring a petition by requiring that two directors consented or the shareholder had over 20 per cent of share capital. A member's right to bring a petition cannot be changed by a company constitution. However, in Re Rica Gold Washing Co[141] the Court of Appeal invented an extra-statutory requirement that a member must have a sufficient amount of money (£75 was insufficient) invested before bringing a petition.[142] For creditors to bring a petition, there must simply be proof that the creditor is owed a debt that is due. In Mann v Goldstein[143] the incorporated hairdressing and wig business, with shops in Pinner and Haverstock Hill, of two married couples broke down in acrimony. Goldstein and his company petitioned for winding up, claiming unpaid directors fees and payment for a wig delivery, but Mann argued that Goldstein had received the fees through ad hoc payments and another company owed money for the wigs. Ungoed Thomas J held the winding up petition was not the place to decide the debt actually existed, and it would be an abuse of process to continue.[144]
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Once in place, the first task of an administrator is to make proposals to achieve the administration objectives. These should be given to the registrar and unsecured creditors within 10 weeks, followed by a creditor vote to approve the plans by simple majority.[106] If creditors do not approve the court may make an order as it sees fit.[107] However, before then under Schedule B1, paragraph 59 the administrator can do 'anything necessary or expedient for the management of the affairs, business and property of the company'.[108] In Re Transbus International Ltd Lawrence Collins J made the point that the rules on administration were intended to be "a more flexible, cheaper and comparatively informal alternative to liquidation" and so with regard to doing what is expedient "the fewer applications which need to be made to the court the better."[109] This means that an administrator can sell the whole assets of a company immediately, making the eventual creditors' meeting redundant.[110] Because of this and out of court appointments, since 2002, "pre-packaged administrations" became increasingly popular. Typically the company directors negotiate with their bank, and a prospective administrator, to sell the business to a buyer immediately after entering administration. Often to the company's directors are the buyers.[111] The perceived benefits of this practice, originating in the 1980s in the United States,[112] is that a quick sale without hiring lawyers and expending time or business assets through formalities, can be effected to keep the business running and employees in their jobs. The potential downside is that because a deal is already agreed among the controlling interested parties (directors, insolvency practitioners and the major secured creditor) before broader consultation, unsecured creditors are given no voice, and will recover almost none of their debts.[113] In Re Kayley Vending Ltd, which concerned an in-court appointed administrator,[114] HH Judge Cooke held that a court will ensure that applicants for a prepack administration provide enough information for a court to conclude that the scheme is not being used to unduly disadvantage unsecured creditors. Moreover, while the costs of arranging the prepack before entering administration will count for the purpose of administrator's expenses, it is less likely to do so if the business is sold to the former management. Here the sale of a cigarette vending machine business was to the company's competitors, and so the deal was sufficiently "arm's length" to raise no concern. In their conduct of meetings, the Court of Appeal made clear in Revenue and Customs Commissioners v Maxwell that administrators appointed out of court will be scrutinised in the way they treat unsecured creditors. Here the administrator did not treat the Revenue as having sufficient votes against the company's management buyout proposal, but the court substituted its judgment and stated the number of votes allowed should take account of events all the way in the run up to the meeting, including in this case the Revenue's amended claim for unlawful tax deductions to the managers' trust funds and loans to directors.[115]

This wide discretion of the administrator to manage the company is reflected also in paragraph 3(3)-(4), whereby the administrator may choose between which result (whether saving the company, selling the business, or winding down) "he thinks" subjectively is most appropriate. This places an administrator in an analogous position to a company director.[116] Similarly, further binding duties allow a broad scope for the administrator to exercise good business judgment. An administrator is subject to a duty to perform her functions as 'quickly and efficiently as is reasonably practicable',[117] and must also not act so as to 'unfairly harm' a creditor's interests. In Re Charnley Davies Ltd (No 2) the administrator sold the insolvent company's business at an allegedly undervalued price, which creditors alleged breached his duty to not unfairly harm them.[118] Millett J held the standard of care was not breached, and was the same standard of care as in professional negligence cases of an "ordinary, skilled practitioner". He emphasised that courts should not judge decisions which may turn out sub-optimal with the benefit of hindsight. Here the price was the best possible in the circumstances. Further, in Oldham v Kyrris it was held that creditors may not sue administrators directly in their own capacity, because the duty is owed to the company.[119] So a former employee of a Burger King franchise with an equitable charge for £270,000 for unpaid wages could not sue the administrator directly, outside the terms of the statutory standard, unless responsibility had been directly assumed to him.[120]
Receivership
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