Liquidation of Company’s Assets in place of Paying Debts

Liquidation is the process of winding up a business to an end when it is financially not performing well. The assets of the business are then distributed among the petitioners. A company goes through the process of liquidation when it is unable to pay its dues in time. As soon as the business of the company ends, the remaining assets are used to pay creditors and shareholders according to the priority of their claims.

When an event of liquidation occurs to a company, the liquidator puts the assets of the company into an auction. The assets could be anything the company owns, such as inventory, furniture, computer equipment, and so on. When a company runs out of cash to pay its creditors then the trustee is appointed to look after the matter and sell off any assets left. A liquidation auction is carried out for a quick process of selling the assets and getting the best possible price in real-time. Whereby, when a company enters into liquidation, its assets are liable to be sold within a short period. So the liquidator does not get the fair price of the assets.  The procedure of auction is very transparent and anyone could take part in a bid despite connection or not with the company. By selling the assets of the company through auction is the best way as the assets are sold to the highest bidder. In this way, the liquidator cannot be answerable for selling the assets cheaply.

Liquidation is a process when a company sells its assets to pay back creditors. To turn the assets of a company into cash, liquidation is necessary to get rid of the debt. But most of the companies do not recover and they tend to end up their business for good. Now, the upgraded technology has made it possible for the company to sell its assets online. They can now set up online marketplaces to put their goods and assets for sale. Buyers get the opportunity to purchase them directly from the sellers. It is a quick way to sell the goods and earn money back. So for the resellers, liquidation sales online is a better process as they get products directly from sellers at the best price in real-time.

Liquidation of stock occurs when shareholders sell their stocks in the open market to get spot cash. When one company ceases its business liquidation of stock takes place and at the same time the interest of the shareholders terminates in the company in exchange for cash. The company then sells off its shares in the market to accumulate cash. Selling of shares of stock in a portfolio by a group of investors or by an individual alone can lead to stock liquidation. It is the most popular method of stock liquidation. These investors do this process through their stockbrokers. The investor makes a profit if the sale price is higher than the purchase price but there is a capital loss when it is vice-versa.

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