Liquidation
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.
2. Any transaction that offsets or closes out a long or short position. Investopedia Says:
Creditors liquidate assets to try and get as much of the money owed to them as possible. They have first priority to whatever is sold off. After creditors are paid, the shareholders get whatever is left with preferred shareholders having preference over common shareholders. Related Terms:
Absolute Priority
Bankruptcy
Creditor
Distressed Securities
Going-Concern Value
Liquidating Dividend
Long
Preferred Stock
Senior Security
Writ of Seizure and Sale |