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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 ?
(58) Therefore, the conclusion that the dissolution of S is not a complete liquidation (and that losses are not deferred under the intercompany transaction rules) should also exempt nonconsolidated corporations from deferral or disallowance of losses under section 267 in the case of an insolvent liquidation.
It should be stressed that liability for wrongful trading cannot arise until there is no reasonable prospect that the company can avoid going into insolvent liquidation.
From 2000 to 2015, in the United States there were 337 property/casualty insurer and 143 life and health insurer impairments (defined for this purpose as conservation, rehabilitation or insolvent liquidation actions taken under court order or without court involvement if regulatory actions have been taken to limit or delay claims, benefits or other payments to policyholders).
Earlier today, AIF's current manager Warner Estate Holdings Plc (LON:WNER) said it will not be able to avoid insolvent liquidation and will transfer its current 5.3% interest in the fund to Hansteen after appointing administrators over its own business.
"If a company sees no possibility of avoiding insolvent liquidation, it is legally compelled to go into administration."