liquidation

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Related to liquidating: Liquidating dividend, Self Liquidating

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 ?
There can be no assurance that the transfer of the Company's assets to the liquidating trust will take place as described, or at all.
All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including the expected timing of the completion of the liquidation or distributions; the estimated per unit distribution from the liquidation; attributes of the Liquidating Trust; tax treatment with respect to distributions; and any statements or assumptions underlying any of the foregoing.
Assuming the final liquidating distribution is $120,000, Jack recognizes a $15,000 capital gain ($120,000 -- $105,000).
The Distribution is possible primarily as a result of orders entered by the Bankruptcy Court disallowing certain claims, and thereby, permitting the release of a claim reserve of approximately $78 million that has been established in conjunction with various disputed claims, as well as approximately $10 million for amounts received on account of other activities, including the Liquidating Trust's interest in certain debt securities issued by WMI Holdings Corp.
The Distribution will be initiated by the Liquidating Trust on Friday, June 8, 2012.
Additionally, the liquidating trustee was not an assignee within the meaning of Sec.
Liquidating Trust Interests distributed to holders of Allowed PIERS Claims shall be issued in two classes: Priority Liquidating Trust Interests and Residual Liquidating Trust Interests.
336(a) provides, in general, that a liquidating corporation will recognize gain or loss on the distribution of its property in a complete liquidation as if the property were sold to its shareholders at FMV.
The timing and amount of interim liquidating distributions (if any) and final liquidating distributions will depend on the timing and amount of proceeds the Company will receive upon the sale of the remaining assets and the extent to which reserves for current or future liabilities are required.
The liquidating distribution announced today represents a partial distribution to shareholders of funds of the Company remaining after the initial liquidating distribution made by the Company in March 2007 and the second liquidating distribution made by the Company in February 2008.
Pursuant to the Bankruptcy Court's order, the four liquidating commodity subsidiaries are authorized to make partial distributions to certain of their creditors, while reserving sufficient amounts for future distributions until the Bankruptcy Court resolves certain outstanding disputes among the creditors of these subsidiaries (more fully discussed below) and for the payment of administrative and priority claims and trust expenses.
20 /PRNewswire/ -- Championship Liquidating Trust announced today that it will make the final liquidating distribution in an aggregate of $441,544.