What Does In Liquidation Mean?

In legal terms, to go into liquidation means to turn over one's assets and accounts to a trustee. This is done so that that the numerous monetary amounts pertaining to the indebtedness of one may be determined authoritatively, and so that the assets can go through a process of discharge.

To go into liquidation simply means the termination of a business or enterprise by putting it's assets on sale, and allocating the earnings to settle present liabilities and the claims of the creditors. The debts are then prioritised and paid off and the remains of the assets are allocated on a pro rata basis to the owners or those who hold company shares.

The word liquidation is obtained from the verb liquidate. The verb liquidate has its origin in Latin and is taken from the word liquidus. Liquidus means liquid. Later, it was adapted by the Late Latin as liquidare or liquidat. The act of paying off or settling a debt or a claim is called liquidation. Liquidation is a process in which a business firms settles its dealings. In this process the liabilities are mapped out and are paid off using the assets of the business. The decrease in assets results in a state of bankruptcy.

The conversion of something (assets) into cash is also termed liquidation. Liquidation is the act of abolishing something or killing someone.