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 ?
Furthermore, Mr Molale said the team was appointed co-liquidators by the master of High Court on June 30, 2019 and assumed full responsibility on August 1, 2019 over all BCL assets in liquidation and in provisional liquidation.
Staff have been very professional throughout the liquidation and I want to thank them for their support as we worked to find new suppliers.
Second: the bankrupt merchant is the businessman who is insolvent of paying debts, and the bankruptcy judgment shall be rendered by the court, and as long as the bankruptcy judgment has not been rendered, his bankruptcy is not conclusive, and the commencement of the liquidation is subject to the issuance of the bankruptcy judgment.
In analyzing these three prongs, the court cited certain factors, such as board resolutions, the adoption of a plan of liquidation, the sale of assets and cancellation of debt, termination of contracts, and the distribution of corporate assets in complete cancellation or redemption of all shareholders' interests.
"The high street banks andHMRC are responsible for a large proportion of petitions to wind-up companies, so any hardening of their position will lead to a significant spike in liquidations." Non Rhys,Wales policy officer for the Federation of Small Businesses (FSB), said there had also been many start-ups during the recession and that SMEs can be more flexible and adaptable than larger businesses.
The administrator must perform his functions with the objective of either rescuing the company as a going concern, achieving a better result for creditors than a liquidation, or realising assets for creditors.
The news in Scotland is not so bad, according to Dains, with the number of company liquidations dropping by 8.6 per cent, with figures down from 140 to 128.
199902001 expands the scope of genuine contraction partial liquidations by permitting the proceeds of the contraction to be moved up a chain of subsidiaries via stock distributions.
Recently, in revenue ruling 90-13, the IRS reaffirmed the notion that the deemed surrender that occurs in a pro rata distribution satisfies the redemption requirement in a partial liquidation. In such a case, an actual surrender is dismissed as a meaningless gesture because each shareholder's proportionate interest remains unchanged.
The above discussion of the Subchapter K provisions that can apply to a liquidation of a partner is only a simple overview of a complex subject.
* A trustee or receiver is usually appointed to manage the liquidation of assets.
For gain attributable to tangible property distributed in the liquidation if it is used in a U.S.