Liquidate

Liquidate (Definition)

To liquidate means to convert assets into cash or cash equivalents by selling them on the open market.

Key aspects of liquidation include:

1. Often occurs when a company is closing down or restructuring
2. Can involve selling inventory, equipment, real estate, or other assets
3. May be voluntary (decided by owners) or involuntary (forced by creditors)
4. Aims to generate cash to pay off debts or distribute to shareholders
5. Can result in losses if assets are sold below book value
6. Process is often overseen by a appointed liquidator in formal proceedings
7. Understanding liquidation is important for assessing risks in distressed companies

Liquidation is a significant event in a companys lifecycle and has important implications for creditors, shareholders, and employees.