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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