Definition of Liquidation
What does the term "liquidation" mean? What is meant when a company is liquidated?
Liquidation occurs when a company is brought to an end. Another term for this - "dissolved".
Every company has assets and property that need to be properly distributed before the company can officially be dissolved. For instance, a bankrupt company might have assets including office desks, company vehicles and property.
For a company to be dissolved, these assets must be distributed.
In order to liquidate a company, it must be determined:
-exactly what assets the company holds
-who has any claims to these assets
The job of a liquidator is to satisfy these claims as best as they can.
Creditors can include the liquidator themselves, secured creditors, unpaid employees, etc.
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