Dictionary
Financial Glossary
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> "Liquidation" Definition |
 Liquidation
When a firms business is terminated, assets are sold, proceeds 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.
1. When a business or firm is terminated or bankrupt, its assets are sold and the proceeds pay creditors. Any leftovers are distributed to shareholders.
When a company"s debts and other liabilities exceed its assets, it is technically insolvent. If the company"s directors are unable to shore up its finance by, for example, raising new equity or debt finance, one of its creditors may appoint a receiver to the company. The receiver"s job is to take over the running of the company, doing whatever he thinks best to help the appointing creditor get its money back. This may result in the company being sold as a going concern or, it may result in the company going into liquidation.When a company goes into liquidation, the receiver will sell its assets as best he can and distribute the cash proceeds in a strict order. Ordinary shareholders of the company come very low down the pecking order, behind trade creditors, but they may eventually recover some or all of their investment. The process of liquidation can last several years.For CGT purposes, a notification by the Stock Exchange that a company"s shares have "negligible value" means that shareholders of the company can establish losses and set them off against gains on other investments.
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Glossary 
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Liquidation \ When a firms business is terminated, assets are sold, proceeds 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.
1. When a business or firm is terminated or bankrupt, its assets are sold and the proceeds pay creditors. Any leftovers are distributed to shareholders.
When a company"s debts and other liabilities exceed its assets, it is technically insolvent. If the company"s directors are unable to shore up its finance by, for example, raising new equity or debt finance, one of its creditors may appoint a receiver to the company. The receiver"s job is to take over the running of the company, doing whatever he thinks best to help the appointing creditor get its money back. This may result in the company being sold as a going concern or, it may result in the company going into liquidation.When a company goes into liquidation, the receiver will sell its assets as best he can and distribute the cash proceeds in a strict order. Ordinary shareholders of the company come very low down the pecking order, behind trade creditors, but they may eventually recover some or all of their investment. The process of liquidation can last several years.For CGT purposes, a notification by the Stock Exchange that a company"s shares have "negligible value" means that shareholders of the company can establish losses and set them off against gains on other investments.
Liquidation / when a firms business is terminated, assets are sold, proceeds 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.
1. when a business or firm is terminated or bankrupt, its assets are sold and the proceeds pay creditors. any leftovers are distributed to shareholders.
when a company"s debts and other liabilities exceed its assets, it is technically insolvent. if the company"s directors are unable to shore up its finance by, for example, raising new equity or debt finance, one of its creditors may appoint a receiver to the company. the receiver"s job is to take over the running of the company, doing whatever he thinks best to help the appointing creditor get its money back. this may result in the company being sold as a going concern or, it may result in the company going into liquidation.when a company goes into liquidation, the receiver will sell its assets as best he can and distribute the cash proceeds in a strict order. ordinary shareholders of the company come very low down the pecking order, behind trade creditors, but they may eventually recover some or all of their investment. the process of liquidation can last several years.for cgt purposes, a notification by the stock exchange that a company"s shares have "negligible value" means that shareholders of the company can establish losses and set them off against gains on other investments.
