Legal Definitions - liquidation

Definition: Liquidation is the process of calculating the debts and distributing the assets of a business that is being closed down. It can also refer to determining the cash value of a debt or damage in a legal conflict.

Example 1: When a company goes bankrupt, it may need to go through liquidation. This means that the company's assets, such as property and equipment, are sold off to pay its debts to creditors.

Example 2: In a legal dispute, the parties involved may agree to liquidate the damages or debts involved. This means that they come to an agreement on a specific dollar amount that will be paid to settle the dispute.

Both examples illustrate the process of liquidation, which involves calculating the value of assets or debts and distributing them accordingly. In the case of a bankrupt company, liquidation is necessary to pay off creditors and close down the business. In a legal dispute, liquidation can help the parties involved come to a resolution and avoid further conflict.