Understanding Liquidation: A Comprehensive Definition
Liquidation Definition Glossary
Introduction
Liquidation is a term used in finance and business to describe the process of selling off assets to pay off debts. It is a common practice when a company is unable to pay its debts and is forced to close down. This glossary page will provide a comprehensive definition of liquidation and its related terms.
Liquidation Definition
Liquidation is the process of selling off assets to pay off debts. It is a legal process that is initiated when a company is unable to pay its debts and is forced to close down. The assets of the company are sold off to pay off its creditors. The process of liquidation is usually carried out by a liquidator who is appointed by the court.
Types of Liquidation
There are two types of liquidation: voluntary liquidation and compulsory liquidation. Voluntary liquidation is initiated by the company's directors when they decide that the company is no longer viable. Compulsory liquidation is initiated by the court when a creditor petitions for the company to be wound up.
Liquidator
A liquidator is a person who is appointed to oversee the liquidation process. The liquidator is responsible for selling off the company's assets and distributing the proceeds to the creditors. The liquidator is also responsible for investigating the company's affairs and reporting any misconduct to the relevant authorities.
Creditors
Creditors are the people or organizations to whom the company owes money. They are entitled to receive payment from the proceeds of the liquidation. Creditors are usually ranked in order of priority, with secured creditors being paid first.
Conclusion
In conclusion, liquidation is a legal process that is initiated when a company is unable to pay its debts. The assets of the company are sold off to pay off its creditors. The process of liquidation is usually carried out by a liquidator who is appointed by the court. There are two types of liquidation: voluntary liquidation and compulsory liquidation. The liquidator is responsible for selling off the company's assets and distributing the proceeds to the creditors. Creditors are the people or organizations to whom the company owes money.
