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- Dictionaryliquidation/ˌlɪkwɪˈdeɪʃn/
noun
- 1. the process of liquidating a business: "the company went into liquidation"
- 2. the killing of someone, typically by violent means. informal
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Liquidation is the process of closing a business or selling an asset to pay debts or get cash. Learn more about the meaning, synonyms, and usage of liquidation in different contexts with Cambridge Dictionary.
- English (US)
a situation in which an asset is sold in order to get cash:...
- Znaczenie Liquidation, Definicja W Cambridge English Dictionary
liquidation definicja: 1. the process of closing a business,...
- Pronunciation in English
LIQUIDATION pronunciation. How to say liquidation. Listen to...
- English (US)
- What Is Liquidation?
- How Liquidation Works
- Distribution of Assets During Liquidation
- Liquidation of Securities
- Example of Liquidation
- What Is the Liquidation of a Company?
- What Does It Mean to Liquidate Money?
- Is a Company Dissolved After Liquidation?
- The Bottom Line
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Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is
, meaning it cannot pay its obligations when they are due. As company operations end, the remaining assets are used to pay creditors and shareholders, based on the priority of their claims.
The term liquidation may also be used to refer to the selling of poor-performing goods at a price lower than the cost to the business or at a price lower than the business desires.
The term liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants.
A bankrupt business is no longer in existence once the liquidation process is complete and it has been deregistered.
Liquidation usually occurs during the bankruptcy process under Chapter 7.
Chapter 7 of the U.S. Bankruptcy Code governs liquidation proceedings. Solvent companies may also file for
, but this is uncommon. Not all bankruptcies involve liquidation;
, for example, involves rehabilitating the bankrupt company and restructuring its debts. In Chapter 11 bankruptcy, the company will continue to exist after any obsolete inventory is liquidated, after underperforming branches close, and after relevant debts are restructured.
Unlike when individuals file for Chapter 7 bankruptcy, business debts still exist after Chapter 11 bankruptcy. The debt will remain until the statute of limitations has expired, and as there is no longer a debtor to pay what is owed, the debt must be written off by the creditor.
Assets are distributed based on the
claims, with a trustee appointed by the U.S. Department of Justice overseeing the process. The most senior claims belong to
who have collateral on loans to the business. These lenders will seize the collateral and sell it—often at a significant discount, due to the short time frames involved. If that does not cover the debt, they will recoup the balance from the company’s remaining liquid assets, if any.
Next in line are unsecured creditors. These include bondholders, the government (if it is owed taxes), and employees (if they are owed unpaid wages or other obligations).
Liquidation can also refer to the act of exiting a securities position. In the simplest terms, this means selling the position for cash; another approach is to take an equal but opposite position in the same security—for example, by
the same number of shares that make up a long position in a stock.
A broker may forcibly liquidate a trader’s positions if the trader’s portfolio has fallen below the
, or they have demonstrated a reckless approach to risk-taking.
Company ABC has been in business for 10 years and has been generating profits throughout its run. In the last year, however, the business has struggled financially due to a downturn in the economy. It has reached a point where ABC can no longer pay any of its debts or cover any of its expenses, such as payments to its suppliers.
ABC has decided that it will close up shop and liquidate its business. It enters into Chapter 7 bankruptcy and its assets are sold off. These include a warehouse, trucks, and machinery with a total value of $5 million. Currently, ABC owes $3.5 million to its
The liquidation of a company happens when company assets are sold when it can no longer meet its financial obligations. Sometimes, the company ceases operations entirely and is deregistered. The assets are sold to pay back various claimants, such as creditors and shareholders. Not all assets will sell at 100% of their value, so the business and bankruptcy courts will determine an
of the property to distribute to creditors.
To liquidate means to convert assets into cash. For example, a person may sell their home, car, or other asset and receive cash for doing so. This is known as liquidation. Many assets are assessed based on how liquid they are. For example, a home is not very liquid because it takes time to sell a house, which involves getting it ready for sale, ass...
No, a company is not dissolved after liquidation. Dissolving a company and liquidating it are two separate procedures. Liquidating a company means selling off its assets to claimants whereas dissolving a company is deregistering it.
When a company becomes insolvent, meaning that it can no longer meet its financial obligations, it undergoes liquidation. Liquidation is the process of closing a business and distributing its assets to claimants.
The sale of assets is used to pay creditors and shareholders in the order of priority. Liquidation is also used to refer to the act of exiting a securities position, usually by selling the position for cash.
Liquidation is the process of ending a business and selling its assets to pay creditors and shareholders. Learn about the different types of liquidation, such as Chapter 7 bankruptcy, inventory liquidation, and securities liquidation, and see how they work.
- Will Kenton
- 2 min
Overview. Liquidation is a process where the company’s assets are seized and realised, with the resulting proceeds used to pay off its debts and liabilities. The information below, unless otherwise stated, is largely applicable to the liquidation of a limited liability partnership.
Liquidation definition: the process of realizing upon assets and of discharging liabilities in concluding the affairs of a business, estate, etc.. See examples of LIQUIDATION used in a sentence.
Liquidation is the process of closing a business or selling an asset to pay debts or get cash. Learn more about the meaning, synonyms, and usage of liquidation in business and finance contexts.
Liquidation is the process in accounting by which a company is brought to an end. The assets and property of the business are redistributed. When a firm has been liquidated, it is sometimes referred to as wound-up or dissolved, although dissolution technically refers to the last stage of liquidation.
May 17, 2024 · Liquidation is the shutdown of a business or business segment that sells off assets to pay off creditors and other liabilities. Learn about the different types of liquidation, the priority of claims, and the consequences of dissolution with examples and FAQs.
