Forced Liquidation

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Forced Liquidation

A situation in which an outside party can force the sale of an asset belonging to another. For example, a bank may force a borrower to sell his/her collateral in order to repay the debt. Likewise, a brokerage can force a client to sell securities if the client is unable to meet a margin call and preferred stockholders can (sometimes) force the liquidation of a publicly-traded company if it does not make preferred dividend payments.
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A few billion dollars were lost, leading to forced liquidations, and a reminder that traders must sell what they can, not what they want to in order to raise cash.
"There, the anticipation of future benefit cuts caused waves of early retirements, forced liquidations of immature assets, and a spiraling decline of pension fund balances," Keller said.