Definition of liquidating

04-Apr-2017 03:56 by 6 Comments

Definition of liquidating - sex dating in temecula california

In such cases, investors in preferred stock have priority over holders of common stock.

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When a company fails to repay its creditors due to financial hardship and prolonged losses in its operations, a bankruptcy court may order a compulsory liquidation of the business assets if the company is found to be insolvent.

The company’s operations are brought to an end, and its assets are divvied up among creditors and shareholders, according to the priority of their claims. Not all bankruptcies involve liquidation; Chapter 11, for example, involves rehabilitating the bankrupt entity and restructuring its debts.

Liquidation is the process of bringing a business to an end and distributing its assets to claimants.

It is not necessary to file for bankruptcy to liquidate inventory.

Liquidation can also refer to the act of exiting a securities position.

An individual may also decide to liquidate assets, such as house and land for cash.

The cash could then be used to boost his or retirement nest egg or pay off creditors.

The most senior claims belong to secured creditors, 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.

A portfolio comprised of stocks and bonds for an investor whose objective is to purchase a home five years from now, may have these securities liquidated in five years.

The cash proceeds would then be used to make a down payment for a home.

As said earlier, not all liquidation is as a result of insolvency.