What do you mean by liquidation?
What Is Liquidation? Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due. General partners are subject to liquidation.
What does liquidate mean?
Liquidate means converting property or assets into cash or cash equivalents by selling them on the open market. Liquidation similarly refers to the process of bringing a business to an end and distributing its assets to claimants.
What does liquidation mean in history?
1a(1) : to determine by agreement or by litigation the precise amount of (indebtedness, damages, or accounts) (2) : to determine the liabilities (see liability sense 2) and apportion assets toward discharging the indebtedness of. b : to settle (a debt) by payment or other settlement liquidate a loan.
What are the duties of liquidators?
Liquidator is a person officially appointed to ‘liquidate’ a company or firm. Their duty is to ascertain and settle the liabilities of a company or a firm. If there are any surplus, then those are distributed to the contributories.
Why is liquidation important?
Liquidation is important if a business fails due to anything from a lack of visionary management to increasing debts; from almost-zero revenue inflow to rising costs of unnecessary assets. Absence of profit planning and control on the continuity of losses for extended periods also call for liquidation.
What is the goal of liquidation?
It includes ceasing all sales and/or operations and allocating proceeds and surpluses among creditors and shareholders. The assets are discharged and the company is deregistered or closed. The purpose of a liquidation is to make sure that a company is wound-up equitably and fairly and its debts paid when due.