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The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts.

A type of proceeding pursuant to federal Bankruptcy law by which certain property of a debtor is taken into custody by a trustee to be sold, the proceeds to be distributed to the debtor's creditors in satisfaction of their claims.

The settlement of the financial affairs of a business or individual through the sale of all assets and the distribution of the proceeds to creditors, heirs, or other parties with a legal claim.

The liquidation of a corporation is not the same as its dissolution (the termination of its existence as a legal entity). Depending upon statute, liquidation can precede or follow dissolution.

When a corporation undergoes liquidation, the money received by stockholders in lieu of their stock is usually treated as a sale or exchange of the stock resulting in its treatment as a capital gain or loss for Income Tax purposes.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.


the procedure under which a company is dissolved (or wound up). Liquidation maybe voluntary (where the company is solvent but where the purposes for which it was set up have been achieved or no longer exist) or compulsory (usually where the company is insolvent). The function of a liquidator is to convert the assets of the company into cash, which is then distributed among the creditors to pay off (so far as possible) the debts of the company. Any surplus is then distributed among the members.
Collins Dictionary of Law © W.J. Stewart, 2006

LIQUIDATION. A fixed and determinate valuation of things which before were uncertain.

A Law Dictionary, Adapted to the Constitution and Laws of the United States. By John Bouvier. Published 1856.
References in periodicals archive ?
Ernst & Young has been instructed by the directors of Trustguard Credit Services to assist them in placing the company into creditors' voluntary liquidation.
Mr Kings said: "I can confirm that Energy Efficient Windows Ltd has gone into creditors' voluntary liquidation."
PwC's corporate insolvency figures, which are based on administration, administrative receivership, company voluntary arrangements and creditors' voluntary liquidation appointments, come hot on the heels of another bleak survey.
Ouseburn Watersports Association in Byker, Newcastle, has gone into creditors' voluntary liquidation with debts of almost pounds 100,000.
In May 2001 four of Corum's subsidiaries, Mortgage Direct, Mortgages 'R Us, Mortgage Direct West and Telemark were placed into creditors' voluntary liquidation and share dealing was suspended.
"It may also involve the partners putting cash into the business and/or agreeing to a lock in." "There is no equivalent to a creditors' voluntary liquidation for a traditional partnership, although this is available to an LLP.
The creditors' voluntary liquidation is the final part of the administration process and is a technicality to allow a dividend to be paid to unsecured creditors.
This came after a 15% yearon-year surge in administrations to 400, though the rise in total insolvencies was largely driven by a jump in creditors' voluntary liquidations (CVLs) to 3,040.
The Insolvency Service reported there were 4,082 compulsory liquidations and creditors' voluntary liquidations in England and Wales - a drop of 8.4 per cent on the previous quarter and a decrease of 17.8 per cent compared to the same period in 2009.
He has experience of a range of cases including pre-pack, trading and non-trading administrations, creditors' voluntary liquidations, members voluntary liquidations and administrative receiverships.
An increase in underlying creditors' voluntary liquidations (CVLs), which were at their highest level since the first quarter of 2012, pushed up the company insolvency figures.