What is Liquidate?

Liquidate (Definition)

Liquidate refers to the process of putting a company's finances in order so that it can pay off its debts with the proceeds from the sale of its assets. It typically occurs when a corporation is bankrupt or on the verge of bankruptcy, which indicates it is unable to pay its debts when they are due. When a corporation goes out of business, the people who owe money to creditors and shareholders are the first to receive their money. During a liquidation, any assets that are not utilised to pay off creditors are transferred to the company's owners, who retain ownership of the assets. An entity's creditors, a court, or other parties can force it to liquidate on its own, after an event occurs, or through a combination of these factors.