If a company is unsuccessful in finding a workable turnaround plan or in selling some assets or itself, it will ultimately have to cease operations and be liquidated. Which involves all of the assets being sold to repay creditors as far as is possible. This liquidation process will be run by a liquidator, which can be the same as the administrator who will be in charge of selling those assets and repaying creditors. Assets of a company going through liquidation are usually sold at a discount to their market and or book value so that the liquidator can raise cash in as fast a way as possible. Note that once a company enters a liquidation process, it will cease trading and it is in the interest of both the liquidator and the creditors to dispose of the assets quickly to avoid value, leakage. Value can be lost in certain ways, such as assets that should have been used to repay creditors are now being used to sustain a longer than anticipated liquidation process or general value destruction of the assets for them not being in use. The cash raised is then used to repay creditors according to their ranking. This ranking varies depending on the jurisdiction, but generally follows the following sequence. First, secured creditors with a fixed charge, which is a claim on a specific asset of the company, such as a building next administrator or liquidator fees. Then preferential creditors, which includes creditors who are given particular legal rights and companies going through liquidation. This might include the tax authorities or employees unpaid wages. Next are secured creditors with a floating charge, which is a claim on a category of assets such as inventory rather than a specific asset, which would be a fixed charge, followed by unsecured creditors. Then subordinated lenders who have agreed to be ranked lower in a liquidation in return for a higher return or higher interest rates that they were receiving. Up to this point. Then comes preference or preferred shareholders. And finally, if any proceeds remain the common stockholders or ordinary shareholders.

Liquidation is always a worst case scenario and usually provides the lowest recovery levels to creditors alongside job losses and shareholder value being completely wiped out as a company ceases to exist.

In some limited circumstances, it's possible for the creditor to fully recover what's owed to them. For example, if the company owns significant levels of valuable freehold property. However, this is unusual.