forced liquidation

Forced liquidation refers to the process of selling a company’s assets quickly, often at reduced prices, typically triggered by financial struggles or bankruptcy. This occurs when a company cannot meet its debts or obligations, and creditors seek recovery of their loans. In this scenario, assets like equipment, inventory, or property are sold off to generate cash, with the proceeds distributed to pay creditors. Unlike voluntary liquidation, in forced liquidation, the decision is often made under pressure, emphasizing urgency and the need to settle debts rather than maximizing asset value.