liquidation

  

Definition

Winding up of a firm by selling off its free (un-pledged) assets to convert them into cash to pay the firm's unsecured creditors. (The secured creditors take control of the respective pledged assets on obtaining foreclosure orders). Any remaining amount is distributed among the shareholders in proportion to their shareholdings. Liquidation process is initiated either by the shareholders (voluntary liquidation) or by the creditors after obtaining court's permission (compulsory liquidation).

Use liquidation in a sentence

  • In its final months as a functioning business, the video rental store had to turn to massive stock liquidation as a means to cover as many existing debts as possible before closing their doors for good.

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  • If you have the opportunity to start a new venture but don't have the cash on hand you may need to undergo a quick liquidation.

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  • In its final months as a functioning business, the video rental store had to turn to massive stock liquidation as a means to cover as many existing debts as possible before closing their doors for good.

    10 people found this helpful    
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