How to Liquidate a Company: 6 Routes and Who Does the Selling in Each

American law has no office called the liquidator. The word appears in search boxes because owners have heard it on British television, or read it in articles written for a country with a different insolvency system, and the question behind it is sound even if the title is borrowed: when a company's property has to be turned into money, who does the selling, who pays that person, and who receives what is left.

In the United States the answer depends on the route. Six routes are described below, arranged roughly by how much control the owners keep, from nearly all of it to none.

1. In a Private Wind Down, the Owners Sell and Hire Whoever Helps

A company that dissolves voluntarily sells its own assets. New York's Business Corporation Law section 1005(a) gives a dissolved corporation power to "sell its assets for cash at public or private sale" while winding up, and the managers decide whether that means a buyer found through the trade, a used equipment dealer, or an auctioneer hired on a commission the parties negotiate.

The owners' freedom is narrower than it looks. A lender's security interest generally continues in the collateral after it is sold and attaches to the proceeds, so a truck sold without the lender's consent still carries the lender's claim. Proceeds go to creditors before owners. This is the cheapest route, and it works only when the creditors are few and willing to let the owners run the sale.

2. When a Secured Lender Forecloses, the Lender Does the Selling

After default, a secured party may take possession of its collateral, with court process or without it if it proceeds "without breach of the peace." It may then sell. Under UCC 9-610, "every aspect of a disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonable," and the sale may be public or private. The lender may buy the collateral itself at a public sale, and at a private one only if the goods are customarily sold on a recognized market or have widely distributed price quotations.

The lender's costs of repossession and sale come out of the proceeds before the debt is credited, and if the proceeds fall short the obligor is liable for the deficiency under section 9-615(d). An owner who guaranteed the loan is usually that obligor, in the practical sense. The commercially reasonable standard is the owner's one real protection here, and a sale held in a parking lot on a Sunday morning with no advertising is the kind of fact that standard was written for.

3. A Receiver Sells Under a Judge's Order

A judgment creditor in New York may ask the court to appoint a receiver under CPLR 5228(a), and the court may authorize the receiver to "administer, collect, improve, lease, repair or sell any real or personal property in which the judgment debtor has an interest." The receiver answers to the court, which approves the receiver's compensation. The owner answers to the receiver.

4. An Assignee for the Benefit of Creditors Sells for Everyone at Once

The company signs its assets over to an assignee, who liquidates them and pays creditors in a statutory order. Florida's chapter 727 is a well documented version: the assignee posts a bond, must liquidate "with reasonable dispatch," may operate the business for up to 45 days to preserve value, and may employ professionals at the estate's expense. The court approves the assignee's fees and any sale outside the ordinary course. Secured creditors are paid from their collateral first, then administrative expenses (the assignee's own fees among them), then priority claims, then unsecured creditors.

What an assignee charges is set in the engagement and approved by the court, and no statute read for this article fixes a percentage.

5. In Chapter 7, the Trustee Sells and the Statute Caps the Commission

This is the closest American equivalent to the liquidator of the question, and it is the one route where the question of cost has a statutory answer. Promptly after a chapter 7 case begins, the United States Trustee appoints a disinterested member of a panel of private trustees as interim trustee. The trustee's duty under section 704(a) is to "collect and reduce to money the property of the estate" and close the estate as quickly as the creditors' interests allow. The court may authorize the trustee to run the business for a limited period under section 721, though only where that serves the estate and an orderly liquidation.

As the Code reads in September 2026, what that trustee may be paid has a ceiling. Under 11 U.S.C. 326(a), the court may allow reasonable compensation "not to exceed 25 percent on the first $5,000 or less, 10 percent on any amount in excess of $5,000 but not in excess of $50,000, 5 percent on any amount in excess of $50,000 but not in excess of $1,000,000," and reasonable compensation up to 3 percent above that, calculated on money the trustee disburses to parties other than the debtor, including secured creditors. Suppose, as a hypothetical, a trustee sells equipment and collects receivables and then disburses $200,000. The ceiling is $1,250 on the first $5,000, $4,500 on the next $45,000, and $7,500 on the remaining $150,000, a total of $13,250. That is a ceiling, not a price; the court awards what is reasonable up to it, and the trustee also receives a small fixed share of the filing fee.

The commission is the visible cost. The professionals are the rest of it.

A trustee may, with the court's approval, employ attorneys, accountants, appraisers and auctioneers who are disinterested (a requirement that excludes, among others, the company's own creditors, its insiders and anyone who served as its officer or employee within two years before the petition, which is why the company's longtime bookkeeper is rarely the person who helps the trustee sell anything), and those professionals are paid reasonable compensation approved by the court. Their fees and the trustee's come out of the estate before unsecured creditors receive anything under section 726. The company itself receives no discharge.

So the answer to how much a liquidator charges, for an American company in chapter 7, is a court-approved amount under a statutory ceiling plus court-approved professional fees, all paid from the assets before the creditors. Whether that is more or less than a private sale would have cost depends on facts no statute captures.

6. In Chapter 11, the Company Sells Its Own Assets Under Court Supervision

A chapter 11 debtor in possession may sell property outside the ordinary course after notice and a hearing under section 363(b), and section 363(f) permits a sale free and clear of liens in listed circumstances. A lienholder may credit bid. But the company still does the selling, which is the attraction, and it pays its own professionals, which is the expense.

Before Anyone Is Hired to Sell

A company whose largest creditor is a merchant cash advance funder sometimes has a route that avoids selling everything. Delancey Street negotiates those balances, frequently where an owner signed a personal guaranty that no liquidation will release, and the first conversation about it is free and private. Delancey is not a law firm and runs no receiverships, assignments or bankruptcy estates; a lawyer answers the legal questions. Where the business cannot pay its creditors on any schedule, a supervised liquidation may be the honest answer. What is sold in a liquidation is property. What is decided is the order in which people are disappointed.