Liquidation of Assets

Liquidation of assets involves selling a company's physical or financial assets—such as equipment, inventory, property, or investments—to generate cash. This process typically occurs when a business is closing, facing severe financial difficulties, or needs to settle debts. The proceeds from these sales are then used to pay off creditors in an order of priority. Liquidation is often a last resort to resolve financial obligations, providing a way to convert assets into cash quickly, though it may result in less than the assets’ full value.