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Before the claims are met, secured creditors are entitled to enforce their claims against the assets of the company to the extent that they are subject to a valid security interest.In most legal systems, only fixed security takes precedence over all claims; security by way of floating charge may be postponed to the preferential creditors.75 percent of the company's shareholders must agree to liquidate for liquidation proceedings to advance.If a limited company’s liabilities outweigh its assets, or the company cannot pay its bills when they fall due, the company becomes insolvent.

The liquidator may also have to determine whether any payments made by the company or transactions entered into may be voidable as a transaction at an undervalue or an unfair preference.If not, the liquidation will proceed as a creditors' voluntary winding-up, and a meeting of creditors will be called, to which the directors must report on the company's affairs.Where a voluntary liquidation proceeds as a creditors' voluntary liquidation, a liquidation committee may be appointed.Where a voluntary winding-up of a company has begun, a compulsory liquidation order is still possible, but the petitioning contributory would need to satisfy the court that a voluntary liquidation would prejudice the contributors.The liquidator will normally have a duty to ascertain whether any misconduct has been conducted by those in control of the company which has caused prejudice to the general body of creditors.

Property which is in the possession of the company, but which was supplied under a valid retention of title clause will generally have to be returned to the supplier.