What does liquidate mean in economics?
What Is Liquidation? 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 insolvent, meaning it cannot pay its obligations when they are due.
What is principle liquidation?
Liquidation Principal . The principal portion of Liquidation Proceeds received with respect to each Mortgage Loan which became a Liquidated Mortgage Loan (but not in excess of the principal balance thereof) during the Prior Period.
What do you mean by liquidation?
Liquidation generally refers to the process of selling off a company’s inventory, typically at a big discount, to generate cash. In most cases, a liquidation sale is a precursor to a business closing. Once all the assets have been sold, the business is shut down.
What does liquidate mean in business?
Liquidation, also referred to as “winding up”, is the process by which a company’s assets are liquidated and the company closed, or deregistered. There is one term that is crucial to understanding liquidation:”insolvent”. A company is solvent if it can pay its debts when they fall due and insolvent if it can’t.
What is an example of liquidate?
The definition of liquidate is to turn assets into cash, or to sell assets and pay creditors. When you sell your shares of stock and turn them into cash, this is an example of when you liquidate. When a furniture store sells off its inventory and goes out of business, this is an example of when it liquidates.
Why is it called liquidate?
Liquidate comes from the Latin liquidare, meaning “to melt,” or “to clarify.” A recipe might ask you to liquefy the butter, not liquidate it, because liquidate has to do with assets. To liquidate is to convert stocks or goods into cash by selling them, to finish business neatly, and to clear debts.
What is an example of liquidation?
The definition of liquidation is the act of turning assets into cash. When a business closes and sells all of its merchandise because it is bankrupt, this is an example of liquidation. When you sell your investment to free up the cash, this is an example of liquidation of the investment.
What does it mean to liquidate a debt?
Liquidated debt is debt in which the amount owed is known. Unliquidated debt is that in which the total amount owed is unknown. This can arise in cases where debt amounts are in dispute or when they’re contingent on an event, such as a court case settlement.
What is liquidation and example?
What is another name for liquidation?
In this page you can discover 24 synonyms, antonyms, idiomatic expressions, and related words for liquidation, like: crimes, clearance, extinction, bankruptcy, elimination, eradication, bankrupt, removal, riddance, annihilation and extermination.
What is liquidation in strategic management?
Liquidation as an Exit Strategy Liquidation entails the closing of a business through the sale of all its assets. The strategy is often used when a business cannot be sold through any of the other methods, usually due to dependence on a specific employee/owner of the company or overall poor strategy/performance.
How do you liquidate a business?
Getting Help Liquidating Your Company’s Assets
- Hire a professional auctioneer and hold a public auction.
- Pay a business broker a fee to sell off your assets.
- File bankruptcy, in which case the a bankruptcy trustee will sell your assets and pay off your creditors with the proceeds.
What is the purpose of liquidation?
The purpose of liquidation is to ensure that all the company’s affairs have been dealt with and all its assets realised. When this has been done, the liquidator will apply to have the company removed from the register at the Companies House and dissolved, which means it ceases to exist.
What is the opposite of liquidation?
Antonyms & Near Antonyms for liquidation. enactment, legislation.
What does it mean to liquidate your assets?
To liquidate assets means to convert non-liquid assets into liquid assets by selling them on the open market. An individual or company can voluntarily liquidate an asset, or can be forced to liquidate assets through the bankruptcy process.
Why do you liquidate a business?
Some of the main advantages of Liquidation are: Removes pressure from all creditors. Prevents further legal action being taken against you. Allows time for the realisation of company assets, ensuring that creditors receive the best possible return in terms of repayment of debt owed.
What is liquidation and types of liquidation?
A Voluntary Liquidation takes one of two forms depending on the solvency of the company (if it can pay its debts when they fall due). Solvent companies require a Members Voluntary Liquidation (MVL). Insolvent companies require a Creditors Voluntary Liquidation (CVL). Members Voluntary Liquidation.
What is another word for liquidation?
Synonyms & Near Synonyms for liquidation. elimination, eradication, erasure, removal.
What is liquidation of money?
What is Liquidate? Liquidate refers to turning assets into cash or cash equivalents by selling them on the open market. Liquidate is also a term used in bankruptcy proceedings in which a person decides to turn assets into a “liquid” form (cash) or is compelled by a legal decision or contract.
Who is called liquidator?
A liquidator refers to an officer who is specially appointed to wind up the affairs of a company when the company is closing—typically when the company is going bankrupt. Assets of a company are sold by the liquidator and the resulting funds are used to pay off the company’s debts.
What is liquidation and how does it work?
What Is Liquidate? Liquidate means converting property or assets into cash or cash equivalents by selling them on the open market. Liquidation similarly refers to the process of bringing a business to an end and distributing its assets to claimants. Liquidation of assets may be either voluntary or forced.
What does it mean to liquidate assets?
Liquidate means to convert assets into cash or cash equivalents by selling them on the open market. Liquidate is also a term used in bankruptcy procedures in which an entity chooses or is forced by a legal judgment or contract to turn assets into a “liquid” form (cash). In finance, an asset is an item that has value.
What is the meaning of liquidity?
Liquidity refers to the ease at which assets can be converted into cash. An asset is said to be liquid if it is easy to buy and sell; for example, short-date government gilts are a highly liquid market because it is easy to sell on the bond markets.
How do you use liquidate in a sentence?
Examples of liquidate in a Sentence. The owners were ordered to liquidate the company and pay their creditors. The company is liquidating its assets. The owners were ordered to liquidate.