Liquidation

Liquidation is the act of ending the existence of a company. The company is said to be "in liquidation" when somebody (a liquidator) has been appointed to wind it up.

A company will go into liquidation if it is unable to pay its debts. Its assets will be sold and whatever money raised will go to settling its debts.

A company may also be put into liquidation by its directors merely if they wish to cease trading - for example, many investment trusts are run for a finite period of time.

At the end of the allotted timespan the trust is liquidated, the assets realised into cash and the cash distributed to the trust's shareholders.

See Also: Online share dealing service Stockmarket Centre

Last Updated: November 2007 © Moneyextra.com

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