Liquidation definition

Liquidation can have two meanings on the markets. The first is the process of distributing a company's assets as it ceases to operate. The second is when you exit a position on a market, usually by selling an asset for cash.

If a company goes into liquidation, then its available assets are used to pay the outstanding obligations it has to creditors – and sometimes to investors. In most countries, shareholders will only receive assets once all creditors have been paid.