Liquidation
| What is Liquidation? Liquidation is the process of converting assets for fiat or its equivalent stablecoins. This is typically done when an entity is insolvent, meaning it cannot pay its debts. Liquidation can also occur when an entity is dissolved or wound up. In a business context, insolvency typically happens when a company is unable to pay its debts as they come due. This can happen for a number of reasons, including poor financial planning, mismanagement, or an unexpected event such as a recession. When a company is insolvent, its creditors may demand that it be liquidated in order to recoup their losses. Liquidation can be either voluntary or involuntary. Voluntary liquidation happens when the company's shareholders agree to sell off its assets in order to pay its debts. Involuntary liquidation, on the other hand, happens when the company's creditors force it into liquidation. Once a company is in liquidation, its assets are sold off and the proceeds are used to pay its debts. Any leftover money is then distributed to the company's shareholders. If the company's assets are not enough to cover its debts, the shareholders may be liable for the remaining amount. Liquidation can be a lengthy and complicated process, so it's important to seek professional help if you're considering it for your business. |
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