Which is worst for me as a creditor?

All three are bad outcomes for an unsecured creditor, but they fail differently. Administration usually means a small recovery (1p to 3p in the pound) once the administrator has sold what they can. Liquidation often means zero, because by the time a company is being wound up there is rarely anything left for unsecured creditors. A CVA can be the best of the three for an unsecured creditor, because the company is committing to pay an agreed percentage; the catch is that about half of CVAs fail.

Can a company go through more than one of these?

Yes, often. A common pattern is: directors propose a CVA, the CVA fails, the company goes into administration, the administrator sells the trading business, and the empty shell is then put into creditors' voluntary liquidation and finally dissolved. Each step appears as a separate filing on Companies House and in The Gazette.

Is a CVA the same as a CVL?

No. A CVA (Company Voluntary Arrangement) is a deal to keep the company alive by paying creditors a percentage over time. A CVL (Creditors' Voluntary Liquidation) is the process for winding up an insolvent company on the initiative of its own directors. The first letter is the same; the outcome is the opposite.

What is a pre-pack administration?

A pre-pack administration is one where the sale of the business has been negotiated before the administrator is appointed, and completes immediately on or shortly after appointment. Pre-packs are statutorily permitted and have their own regulatory scrutiny (the Pre-Pack Pool, an independent evaluator) when the buyer is connected to the existing management. They are controversial because unsecured creditors usually have no say in the sale terms.

What is a winding-up petition?

A formal court application by a creditor (often HMRC) asking the court to wind up a company. Once a petition is presented and advertised in The Gazette, the company's bank account is typically frozen, and the company has a small window to settle, defend, or seek a stay before the court hearing. A successful petition leads to compulsory liquidation. We never publish unproven petitions on our public pages.

Who actually decides between these three processes?

It depends on who is making the application. Directors usually choose administration or a CVA, often with advice from an insolvency practitioner about which gives the best chance of saving the business. Creditors can force a winding-up petition (compulsory liquidation) by petitioning the court. A qualifying floating-charge holder (typically a secured bank) can appoint an administrator out of court. Where the company has time and a workable plan, a CVA or administration is the usual choice; where the company is out of options, it tends to be liquidation.

Where does the law come from?

All three processes are governed by the Insolvency Act 1986 and the Insolvency (England and Wales) Rules 2016. Administration sits in Schedule B1 of the Act; CVAs are in Part I; liquidation is split between Part IV (voluntary) and Part V (compulsory). Scotland uses the equivalent Insolvency (Scotland) Rules 2018. The administrator, supervisor, or liquidator must be a licensed insolvency practitioner regulated by one of five recognised professional bodies.

Administrator.uk

Administration vs liquidation vs CVA: what's the difference?

By the administrator.uk editorial teamLast reviewed 23 May 2026

Administration tries to rescue the company or get a better result than winding it up. Liquidation winds the company up and dissolves it. A CVA keeps the company trading while paying creditors an agreed percentage over time. All three are statutory processes under the Insolvency Act 1986, all three require a licensed insolvency practitioner, and all three end up on Companies House and The Gazette. All three are also only available once the company is legally insolvent: see when does a UK company become insolvent for the section 123 test that fires the process.

Below is the side-by-side, the detail on each one, and what each means for a creditor on the wrong end of an unpaid invoice. (If the company is solvent and the directors want to close it, none of these three is the right tool, see strike-off instead.)

Side by side

The three processes, on one page

	Administration	Liquidation	CVA
Primary aim	Rescue the company as a going concern, or get a better result for creditors than an immediate winding-up.	Wind the company up, sell its assets, pay creditors in order, and dissolve it.	Pay creditors an agreed percentage of their debt over time, and keep the company trading.
Does the company survive?	Sometimes. The business may be sold as a going concern; the legal entity is usually dissolved afterwards.	No. The company is struck off Companies House at the end.	Yes, if the CVA performs. Roughly half do not complete and the company falls into administration or liquidation.
Who runs the company?	The administrator, a licensed insolvency practitioner. The directors lose control on the day of appointment.	The liquidator, a licensed insolvency practitioner. The directors' powers end on appointment.	The directors stay in control. A licensed insolvency practitioner acts as the supervisor.
How long does it take?	Twelve months by statute, extendable by court order or creditor consent. Most cases run twelve to twenty-four months.	Months to several years, depending on the company's complexity. Compulsory liquidations average about two years.	Typically three to five years. Payments are made monthly to the supervisor.
How is it started?	Out of court by the directors or a qualifying floating-charge holder, or by court order on a creditor application.	Voluntary: by the shareholders for a solvent winding-up (MVL) or by the directors with creditor approval for an insolvent one (CVL). Compulsory: by court order, usually following a winding-up petition.	Proposed by the directors. Approved if 75 percent of creditors by value (and 50 percent of unconnected creditors) vote in favour.
Does trading continue?	Often, while the administrator looks for a buyer. Sometimes only for the short period it takes to sell the business.	No. Trading stops almost immediately on appointment.	Yes. The whole point is to keep the business running while paying off historic debt.
What happens to my unpaid invoice?	Becomes an unsecured claim. Typical recovery for unsecured creditors is 1p to 3p in the pound, often nothing.	Becomes an unsecured claim. Final dividend depends on what the liquidator can realise; often zero for unsecured creditors.	You receive the percentage agreed in the proposal, paid in instalments over the term. If the CVA fails, you become an unsecured creditor in whatever process follows.
Statutory basis	Insolvency Act 1986, Schedule B1.	Insolvency Act 1986, Parts IV (voluntary) and V (compulsory).	Insolvency Act 1986, Part I.

Administration

Trying to save the patient

Administration is the formal UK process for trying to rescue a company while protecting it from its creditors. The directors lose control on the day of appointment; an administrator (a licensed insolvency practitioner) takes over and works through three statutory objectives in order: rescue the company as a going concern; achieve a better result for creditors than an immediate winding-up; or realise the company's property to pay secured and preferential creditors.

The point of the third objective is that even when the company itself cannot be saved, the trading business inside it often can. A common outcome is a sale of the business and assets to a third party, leaving the empty company to be wound up.

Key features

Statutory twelve-month duration, extendable by court order or by consent of secured and preferential creditors.
A moratorium suspends most legal action against the company; creditors cannot start or continue proceedings without permission.
Appointment can be by the court, by the directors out of court (after filing a notice of intention to appoint), or by a qualifying floating-charge holder out of court.
The administrator must file a proposal with creditors within eight weeks setting out the strategy; progress reports follow every six months.

Browse current UK companies in administration for a sense of how the process actually plays out across sectors and towns.

Liquidation

Winding the company up for good

Liquidation is the process of ending the company's existence. The liquidator (a licensed insolvency practitioner) gathers the company's assets, settles claims in order of priority, and applies for the company to be struck off Companies House. There are three flavours.

Members' Voluntary Liquidation (MVL)

The solvent variant. Used when shareholders decide to close a company that can pay all its debts (typically because the trading purpose has ended, or to extract value tax-efficiently). The directors sign a statutory declaration of solvency and the company is wound up in an orderly way.

Creditors' Voluntary Liquidation (CVL)

The directors' acknowledgement that the company is insolvent and cannot continue. Initiated by a resolution of the shareholders, ratified by creditors, who appoint the liquidator. The most common formal insolvency process in the UK by volume.

Compulsory liquidation

Imposed by court order, almost always following a winding-up petition presented by a creditor (HMRC is by far the most frequent petitioner). The court appoints the Official Receiver as initial liquidator; an insolvency practitioner is usually appointed later if there are assets to realise.

Order of priority

The order in which a liquidator pays out is set by section 175 of the Insolvency Act 1986: liquidator's costs and expenses, then preferential creditors (employees and certain HMRC debts), then floating-charge creditors, then unsecured creditors (pari passu), and finally the shareholders if anything is left. This is similar to but not identical to the administration distribution order.

Company Voluntary Arrangement

A deal with the creditors to stay alive

A CVA is a formal agreement between an insolvent (or near-insolvent) company and its creditors to pay back an agreed percentage of debt over an agreed period, usually three to five years. Unlike administration and liquidation, the directors stay in charge of the company. An insolvency practitioner is appointed as the supervisor and monitors the arrangement.

Approval threshold

For a CVA to bind all creditors, it must be approved by 75 percent or more by value at a creditors' meeting, with at least 50 percent of unconnected creditors also in favour. Once approved, every unsecured creditor (including any who voted against, or did not vote) is bound by the terms.

What unsecured creditors typically get

A CVA proposal sets a fixed percentage payment, paid in monthly contributions to the supervisor and distributed periodically. Typical proposals offer between 20p and 50p in the pound, paid over three to five years; some go lower. The headline percentage is usually better than what an unsecured creditor would receive in an administration or liquidation, which is part of why creditors vote them through.

The catch

About half of all CVAs fail to complete. The company misses contributions, the supervisor terminates the arrangement, and the company drops into administration or liquidation. HMRC has become more reluctant to approve CVAs since their elevation to secondary preferential creditor in 2020, since they typically do better in a winding-up.

What it means

For a creditor on the other end

If you are owed money by a customer that is going into one of these three processes, the practical difference is the size of the cheque you might eventually receive, how long you wait for it, and whether you can keep trading with them in the meantime.

Administration: stop further supply unless the administrator confirms otherwise in writing. Submit a Proof of Debt to the administrator. Expect a small dividend, if any, within eighteen to twenty-four months.
Liquidation: stop further supply. Submit a Proof of Debt to the liquidator. Expect to receive nothing on a compulsory liquidation; the picture is similar on most CVLs unless there are recoverable assets.
CVA: you may be asked to continue supplying, often on revised terms (cash on delivery, shorter credit limits). The CVA proposal sets out what you will receive; you'll be paid that percentage of your debt in instalments over the term, assuming the CVA performs.

The deeper guides are on the next page over: what happens to your unpaid invoice when a customer goes into administration, and the liquidation parallel, a company that owes you money has gone into liquidation: what to do. The action list on either page applies, with the obvious changes, to all three processes.

Next time

Find out before the appointment notice, not after.

Companies almost never go from healthy to administered in a single step. The filings that precede an insolvency (late accounts, multiple new charges, a Notice of Intention to Appoint Administrators, a winding-up petition advertised in The Gazette) usually land days or weeks before the formal appointment. Reading them is free; remembering to look every week is the hard part.

Confirmed is free: add up to five customers or suppliers, and you get an email the day one of them goes into administration. Protect adds liquidation, strike-off, and the earlier warning signs, across an unlimited number of companies.

Start free →Or see this week's UK administrations →

Frequently asked

The questions that come up

Which is worst for me as a creditor?: All three are bad outcomes for an unsecured creditor, but they fail differently. Administration usually means a small recovery (1p to 3p in the pound) once the administrator has sold what they can. Liquidation often means zero, because by the time a company is being wound up there is rarely anything left for unsecured creditors. A CVA can be the best of the three for an unsecured creditor, because the company is committing to pay an agreed percentage; the catch is that about half of CVAs fail.
Can a company go through more than one of these?: Yes, often. A common pattern is: directors propose a CVA, the CVA fails, the company goes into administration, the administrator sells the trading business, and the empty shell is then put into creditors' voluntary liquidation and finally dissolved. Each step appears as a separate filing on Companies House and in The Gazette.
Is a CVA the same as a CVL?: No. A CVA (Company Voluntary Arrangement) is a deal to keep the company alive by paying creditors a percentage over time. A CVL (Creditors' Voluntary Liquidation) is the process for winding up an insolvent company on the initiative of its own directors. The first letter is the same; the outcome is the opposite.
What is a pre-pack administration?: A pre-pack administration is one where the sale of the business has been negotiated before the administrator is appointed, and completes immediately on or shortly after appointment. Pre-packs are statutorily permitted and have their own regulatory scrutiny (the Pre-Pack Pool, an independent evaluator) when the buyer is connected to the existing management. They are controversial because unsecured creditors usually have no say in the sale terms.
What is a winding-up petition?: A formal court application by a creditor (often HMRC) asking the court to wind up a company. Once a petition is presented and advertised in The Gazette, the company's bank account is typically frozen, and the company has a small window to settle, defend, or seek a stay before the court hearing. A successful petition leads to compulsory liquidation. We never publish unproven petitions on our public pages.
Who actually decides between these three processes?: It depends on who is making the application. Directors usually choose administration or a CVA, often with advice from an insolvency practitioner about which gives the best chance of saving the business. Creditors can force a winding-up petition (compulsory liquidation) by petitioning the court. A qualifying floating-charge holder (typically a secured bank) can appoint an administrator out of court. Where the company has time and a workable plan, a CVA or administration is the usual choice; where the company is out of options, it tends to be liquidation.
Where does the law come from?: All three processes are governed by the Insolvency Act 1986 and the Insolvency (England and Wales) Rules 2016. Administration sits in Schedule B1 of the Act; CVAs are in Part I; liquidation is split between Part IV (voluntary) and Part V (compulsory). Scotland uses the equivalent Insolvency (Scotland) Rules 2018. The administrator, supervisor, or liquidator must be a licensed insolvency practitioner regulated by one of five recognised professional bodies.