Liquidation

Liquidation, in business and law, is when a company (or a part of one) closes, and its assets are sold or redistributed to partners, shareholders and/or creditors. Liquidating a business may be voluntary (sometimes known as shareholders’ liquidation) or compulsory (sometimes known as creditors’ liquidation, often due to the company being declared insolvent and needing to sell its assets to repay its debts. After debts are repaid, the remaining assets, if there are any, are shared between stakeholders). The term may also sometimes be used to describe when a company sells some of its assets while remaining in business, such as a restaurant chain closing and selling some of its branches; or, to refer to a business selling off some of its inventory at a discount to recoup some costs.