The decision to liquidate or trade out a company in financial distress requires considerable judgment by a provisional liquidator or administrator. While some general procedures and guidelines are available, there is no explicit framework to assist a provisional liquidator or administrator in making a recommendation to liquidate or trade out. This paper reports on the development of an expert system as a method of studying the judgments made by provisional liquidators or administrators in cases of corporate financial distress. The results reveal the major factors that are assessed in making a liquidate or trade‐out decision, and support recent calls for expanding the type of information provided by traditional accounting system