Liquidation

RECENT NEWS
Forbes  Feb 13  Comment 
Sears continues to shed assets and cuts costs in a bid to stay float. Yet without a strategy to regain relevancy, its effort only seem to be delaying the inevitable.
TechCrunch  Dec 26  Comment 
 You may have experienced a chill as the words fell upon your ears, too. There’s a non-medical reason for this: liquidation preferences are created to ensure that investors get paid before anyone at a startup when the company either sells or...
Wall Street Journal  Dec 19  Comment 
American Apparel LLC will close nine of its stores, including locations in New York and Washington, D.C., by Dec. 31 and won approval of an agreement with liquidators that would govern the closure of any stores that aren’t sold during an...
The Hindu Business Line  Dec 16  Comment 
A liquidator should ordinarily sell the assets through auctions. He may sell the assets through private sale only when the asset is perishable
The Economic Times  Dec 15  Comment 
As per the norms, a liquidator should ordinarily sell the assets through auctions and private sale would be allowed only if the asset is perishable.
Forbes  Dec 13  Comment 
Gawker Media's fight with Hulk Hogan is over. A federal bankruptcy judge approved the now defunct media company's liquidation plan on Tuesday, paving the way for Gawker's many creditors to be paid.




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Business Liquidation

The process of selling assets for cash.

This situation generally arises when a company can no longer carry out it's business as intended, by making profits and, share holders do not have any chance of gaining from investing in the company.

The cash generated out of liquidation is usually spent on reducing debts that company own to its lenders.

For example, Lehman Brothers filed for Chapter 11 bankruptcy protection on September 15, 2008 and now in Jan 2009, Barclay's [which took over Lehman, LEHMQ:US] is in the process of liquidating it, though Lehman has a couple of trillion dollars in assets.

Winding up would mean liquidating the assets of a corporation or partnership, settling accounts, paying bills, distributing remaining assets to shareholders or partners, and then dissolving the business. Winding up a non-profit corporation requires a plan for distribution of assets to some charitable or other non-profit entity. [1]

Investors Liquidation

Liquidation is the conversion of assets into cash by an Investor getting rid of a position in a particular type of security. [1] When Investors convert assets into cash for there own personal accounts, they may have no reason too convert, and may spend the proceeds on whatever they want, whenever they want.

Liquidation is simply the conversion of assets into cash, liquidity refers to how quickly you can convert your assets into cash. [2] For example, a portfolio manager might decide to liquidate a position in a stock by selling all the shares of that stock held in the portfolio. [3]

c.1575, "to reduce to order, to set out clearly," sense of "clear away" (a debt) first recorded 1755. The meaning "wipe out, kill" is from 1924. [2]

References

  1. Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott Accounting Professor ISBN-10: 0618176519 pg 212
  2. Stock Investing for Dummies‬ By Paul Mladjenovic pg22 ISBN-10: 0470401141
  3. Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. ISBN-10: 0618176519 pg212
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