Liquidation

Occurs when a firm's business is terminated. Assets are sold, proceeds are used to pay creditors, and any leftovers are distributed to shareholders. Any transaction that offsets or closes out a long or short position. Related: Buy in, evening up, offset liquidity.

Liquidation

The conversion to cash. Liquidating a position may simply mean selling stock or bonds; the seller in this case receives the cash. Liquidation also refers to a situation in which a company ceases operations and sells as many assets as it can; the company uses the cash to repay debt and, if possible, shareholders. Liquidation often has a negative connotation for this reason. See also: Panic selling.

liquidation

1. The conversion of assets into cash. Just as a company may liquidate an entire subsidiary by selling it to another firm, so too may an investor liquidate by selling a particular type of security.

2. The paying of a debt.

3. The selling of assets and the paying of liabilities in anticipation of going out of business.

Case Study If eliminating dividends, laying off employees, selling subsidiaries, restructuring debt, and, finally, reorganization under Chapter 11 bankruptcy fail to resuscitate a business, the likely outcome is liquidation. Early 2001 witnessed the end of the line for Tennessee-based retailer Service Merchandise, a 42-year-old chain of catalog showrooms that proved unable to compete with large discounters such as Wal-Mart. Following a three-year attempt at reorganization under Chapter 11 bankruptcy, the firm announced it would close all 216 stores and liquidate its inventories and real estate. It was expected the asset liquidation would result in creditors being paid only a portion of their claims while stockholders of the company would receive nothing. The firm's stock was trading over the counter for 2¢ per share at the time of the announcement.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

liquidation

the process by which a JOINT-STOCK COMPANY'S existence as a legal entity ceases by the winding-up of the company Such a process can be initiated at the behest of the CREDITORS where the company is insolvent (a compulsory winding-up), or by the company directors or SHAREHOLDERS, in which case it is known as a voluntary winding-up.

The person appointed as liquidator, either by the company directors/shareholders or by the creditors, sells off the company's ASSETS for as much as they will realize. The proceeds of the sale are used to discharge any outstanding liabilities to the creditors of the company. If there are insufficient funds to pay all creditors (INSOLVENCY), preferential creditors are paid first (for example the INLAND REVENUE for tax due), then ordinary creditors pro rata. If there is a surplus after payment of all creditors this is distributed pro rata amongst the ordinary shareholders of the company. See also LIMITED LIABILITY, SHAREHOLDERS, CAPITAL.

liquidation

the process by which a JOINT-STOCK COMPANY's existence as a legal entity ceases by ‘winding up’ the company. Such a process can be initiated at the behest of the CREDITORS where the company is insolvent (a compulsory winding-up) or by the company directors or SHAREHOLDERS, in which case it is known as a voluntary winding-up.

The person appointed liquidator, either by the company directors/shareholders or the creditors, sells off the company's ASSETS for as much as they will realize. The proceeds of the sale are used to discharge any outstanding liabilities to the creditors of the company. If there are insufficient funds to pay all creditors (INSOLVENCY), preferential creditors are paid first (for example, the INLAND REVENUE for tax due), then ordinary creditors pro rata. If there is a surplus after payment of all creditors, this is distributed pro rata amongst the shareholders of the company. See also LIMITED LIABILITY, SHAREHOLDERS.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005

Liquidation

The process of converting securities or other property into cash.

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References in periodicals archive

* Entities that adopted the liquidation basis of accounting in accordance with the limited guidance about when and how to apply the liquidation basis provided by other ASC topics (e.g., ASC 960, 962, and 965-40 for terminating employee benefit plans) prior to the effective date of ASU 2013-07 need not comply with the provisions of ASC 205-30, but instead may continue to apply the provisions of those other ASC topics (as they were prior to the 2013 amendments) during the liquidation period (ASC 205-30-65-lb).

Liquidation Basis Accounting and Reporting

"This is the major pending issue in the liquidation of the company," Registrar General Bemanya Twebaze says in the status update on Uganda Airlines.Three optionsBut even if the government gets the debt out of the way, there are other legal hurdles before the name Uganda Airlines could revert to the national carrier.

Uganda Airlines 'hits turbulence' before takeoff

The OVP also reiterated the timelines for cash advance liquidation, she said, adding that failure to follow them could result in the withholding of salaries of concerned staff.

Robredo's office: All cash advances liquidated, measures in place to prevent delays

In February, Funa also ordered the liquidation of CAP General Insurance Corp., which formed part of the troubled CAP group of companies.

Philippine Phoenix Surety begins liquidation

And because the NY Court of Appeals long ago determined that the liquidation bureau is not a state agency, it is not subject to audit by the attorney general's office or any other government oversight mechanism, nor is it subject to public access to records under the Freedom of information Law (FOIL).

Bad laws/bad actors Part II

When the bankruptcy judgment has entered into force, a transcript shall be sent to the Liquidation Office and then the office shall proceed to settle the debts as soon as the receipt of the transcript [1].

Studying the ways of recovering debts from a bankrupt merchant

Delvaux was provided with copy of the local liquidator's final report on liquidation of branches.

BCCI branches liquidation process completed

Delvaux was also briefed on the procedures carried out by the UAE's Central Bank pursuant to established laws, which included addressing the Ministry of Economy to register completion of the liquidation in the Commercial Registry and write off the name(s) of the branch(es) of the bank from the Commercial Registry at the Ministry, in addition to notifying the Ministry of Justice and other concerned official agencies, as per the Liquidation Plan.

Central Bank officially announces liquidation of BCCI (SA) branches in UAE

Director of Creative Design and Marketing for Able Liquidation, Relocation and Personal Assistance Services, Dana Diamond, has had to rethink Advertising and Marketing Campaigns.

Professional Estate Liquidations Increase as South Florida Real Estate Market Rebounds

ECONOMICS expert Neil Patey insists Hearts majority shareholder Vladimir Romanov will score a financial own goal if he allows the capital club to enter liquidation.

VLAD WON'T SCORE O.G