Liquidation isn’t failure

Liquidation has long been misunderstood as a last resort for failed businesses.

In reality, it’s often a deliberate, strategic decision – one that allows directors to close a chapter responsibly, efficiently and on their own terms.

When handled properly, liquidation protects stakeholders, limits risk and preserves reputations.

In this article, Marie Lee, executive director, restructuring and recovery, at Baker Tilly in Singapore, challenges three common myths surrounding liquidation.

Myth 1: Liquidation means failure

Reality: Liquidation can be a smart business move.

Companies are liquidated for many strategic reasons: to complete original objectives, simplify group structures, resolve shareholder decisions or eliminate ongoing costs.

Far from chaos, liquidation can be a clean, controlled exit.

Myth 2: Liquidation equals personal bankruptcy

Reality: Directors are not automatically personally liable.

Liquidating a company does not mean a director becomes personally insolvent.
Creditors cannot pursue personal assets unless there are personal guarantees or proven misconduct.

For most directors, liquidation is a corporate process, not a personal collapse.

Myth 3: Liquidation leads to disqualification

Reality: Liquidation alone does not necessarily end a director’s career.

In many territories, including Australia, Canada, Ireland, Singapore and the UK, directors are not disqualified simply because a company is liquidated.

Disqualification only arises in cases of insolvency combined with unfit conduct.
Many directors continue to run local and international businesses after a liquidation.

Liquidation, reframed

Liquidation isn’t about stigma or failure.

It’s about clarity, accountability and moving forward with confidence.

When done right, liquidation is not the end of the story – it’s a strategic decision to close one chapter well and begin the next stronger.