Definition - What does Liquidation mean?

Liquidation refers to the process that a business goes through, generally when the company is being brought to an end, where the property and assets are sold. Upon sale of the property and assets, the money is then redistributed to creditors and shareholders.

Whether liquidation occurs as a result of litigation, bankruptcy or other means it is typically overseen by a court of law. Liquidation may also occur as a result of personal bankruptcy.

Justipedia explains Liquidation

In general, the purpose of the liquidation process is to turn what the company owns into cash, and then to disperse that cash to people that the company owes money to. There are two types of liquidation: voluntary liquidation and compulsory liquidation. Voluntary liquidation typically involves the company paying money that it owes to the shareholders of the company. Compulsory liquidation typically involves the company being forced to sell its assets in order to pay its debts.

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