When a business is not able to pay the debts it owes, its creditors may decide to petition for a winding up order.
If the debts cannot be paid back before the court date and the application is successful and the order made, the business accounts are frozen. Any assets would be liquidated and divided between creditors.
When a business is not able to pay the debts it owes and the owner/directors/shareholders recognise this, they can instruct an insolvency practitioner to close the business.
The liquidator takes control of the company and oversees the liquidation process. This is the most favoured route of liquidation.
This is a formal binding arrangement which is agreed with your creditors. Not all creditors may agree, but a 75% majority vote (by value of the amount owed to them) will secure the deal.
Even if some creditors do not vote they are still bound to it. This becomes a legally binding contract which will stop any interest on monies owed and will pay back creditors a proportionate amount of what they are owed.