What's the difference between administration, liquidation, and just shutting down?

These three options represent different legal approaches to ending or rescuing a company, each with distinct purposes, processes, and consequences. Administration is a formal insolvency procedure where an insolvency practitioner takes control of the company with the primary goal of rescuing it as a going concern, or at least achieving better results for creditors than immediate liquidation would. During administration, the company receives protection from creditor legal action (a moratorium), allowing breathing space to restructure, negotiate with creditors, arrange sales, or trade while seeking a buyer. Administration can lead to company survival through restructuring, sale to new owners, or transition into a CVA, though it sometimes ends in liquidation if rescue proves impossible. Directors lose day-to-day control but the process aims to preserve value, jobs, and potentially the business itself. Liquidation is the formal process of permanently closing the company and distributing its assets to creditors in statutory order of priority. In Creditors' Voluntary Liquidation (CVL), directors acknowledge insolvency and appoint a liquidator to wind up the business in an orderly way. In compulsory liquidation, creditors force closure through court orders. In both cases, the company stops trading, all employees are dismissed, assets are sold, and the company is eventually struck off the register and ceases to exist. Liquidation is final—there is no business rescue element, though it provides structured closure that protects directors from accusations of improper conduct if handled correctly. 'Just shutting down' informally, often called striking off or dissolution, is an administrative process where directors apply to Companies House to remove a dormant or solvent company from the register. This is only appropriate for companies with no debts and no ongoing business—it's not a legitimate way to deal with insolvency. If a company with debts is struck off, creditors can apply for restoration and pursue directors for misconduct. Informal shutdown avoids the cost and complexity of formal procedures but provides no protection if creditors subsequently emerge. The choice between these depends on the company's circumstances: if there's genuine hope of rescue or the business has value worth preserving, administration may be appropriate; if the company is irretrievably insolvent but directors want to close responsibly, CVL is correct; if creditors are forcing closure through court action, compulsory liquidation may be imposed; and only if the company is truly dormant with no liabilities should informal striking off be considered. Directors facing these choices should seek professional insolvency advice because choosing the wrong process can result in personal liability, director disqualification, and criminal prosecution in serious cases of attempting to evade creditor claims through improper dissolution.