liquidation


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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.

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.

Liquidation

The process of converting securities or other property into cash.
References in periodicals archive ?
But if the transfer and subsequent deemed liquidation are not pursuant to the same plan, the recast of an outbound stock transfer into a foreign-to-foreign asset reorganization may not occur.
The liquidation amount per share for the Series B-3-1 Subordinate Preferred Shares and the Series B-3-2 Subordinate Preferred Shares is $500,000, and there are 50 shares and 40 shares outstanding, respectively.
A status of liquidation exists when a corporation ceases to be a going concern and its activities are merely for the purpose of winding up its affairs, paying its debts and distributing any remaining balance to its shareholders (Regs.
As noted above, WRP's net assets in liquidation aggregated $55,844,106, or $8.
Whether all outstanding shares confer identical distribution and liquidation rights depends on the "governing provisions," which include the corporate charter, articles of incorporation, bylaws, applicable state law and "binding agreements" that relate to distribution and liquidation proceeds.
On July 17, 2006 the United States Bankruptcy Court for the District of New Jersey entered a confirmation order in respect of the plan of liquidation of Able Laboratories, Inc.
The Service also relied on prior decisions that denied any reduction for capital gain when there was no liquidation plan or asset sale as of the valuation date (Cruikshank, 9 TC 162 (1947)).
In Letter Ruling 9721020, the IRS discussed a related issue involving an actual, in-kind liquidation of an S corporation with QSST shareholders.
Pink Sheets:HETC) (the "Company") announced today that its Board of Directors has approved the dissolution of the Company and adopted a plan of complete liquidation and dissolution, which will be submitted to the Company's stockholders for approval.
First, before getting into the specifics, when a QSSS election is made for an S subsidiary, SBJPA legislative history(3) suggests that the deemed liquidation is governed under Secs.
AMEX:WRP) announced today that its net assets in liquidation at March 31, 2006 aggregated $53,383,604 or $8.