LIQUIDATION (i.e. making " liquid " or clear)  , in law, the clearing off or settling of a debt . The word was more especially used in bankruptcy law to define the method by which, under the Bankruptcy Act 1869, the affairs of an insolvent debtor were arranged and a composition accepted by his creditors without actual bankruptcy . It was abolished by the Bankruptcy Act 1883 (see BANKRUPTCY) . In a general sense, liquidation is used for the act of adjusting debts, as the Egyptian Law of Liquidation, July 1880, for a general settlement of the liabilities of Egypt . In company law, liquidation is the winding up and dissolving a company . The winding up may be either voluntary or compulsory, and an officer, termed a liquidator, is appointed, who takes into his custody all the property of the company and performs such duties as are necessary on its behalf (see COMPANY) .