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Liquidation

• When a firm's business is terminated, assets are sold, proceeds pay creditors and any leftovers are distributed to shareholders. Any transaction that offsets or closes out a Long or short position. Related: buy in, evening up, offset liquidity.

• Is the act of selling some or all positions to reduce or close out a portfolio.

 
 Embedded terms in definition
 Assets
Buy in
Buy
Close out
Close
Distributed
Evening up
Liquidity
Long
Offset
Out
Portfolio
Position
Shareholders
Short position
Short
 
 Referenced Terms
 Assignment: The receipt of an exercise notice by an options writer that requires the writer to sell (in the case of a call) or purchase (in the case of a put) the underlying security at the specified strike price.Is the action for the seller of the option of acquiring the opposite position when an option is exercised. When a put is exercised, the writer receives a long position in securities or a long futures contract. When a call is exercised, the writer receives a short position in the securities or a short futures contract.A voluntary Liquidation procedure by which a firm's creditors pass the power to liquidate the firm's assets to an adjustment bureau, a trade association, or a third party, which is designated the assignee.

 Back end load: A sales charge or commission for an investment paid by the buyer at the time of sale.Refers to charges which are imposed upon the redemption or Liquidation of an investment position. Often these charges are on a sliding scale. Sometimes, these charges are viewed as early withdrawal penalties. They are called backend because they occur at the end of the investment process.A commission or sales fee that is charged upon the redemption of Mutual Fund shares or Variable Annuity contracts. It declines annually, and reaches zero over an extended holding period -- up to eight years -- as described in the prospectus. See also: Front-End Load; Contingent-Deferred Sales Load.

 Buy in: Occurs when a seller or short seller fails to deliver the securities required to satisfy a transaction's terms. The net financial impact of this transaction is charged to the account of the seller.To cover, offset or close out a short position. Related: evening up, Liquidation.

 Debt: Refers to a relationship which obligates a borrower to pay interest and principal. The terms are often in writing and define the relationship. Indentures and mortgage notes are common types of these written instruments of indebtedness.Debt is a higher priority claim (in Liquidation') compared to equity. These payments must be made, otherwise the firm will be subject to court-ordered bankruptcy or liquidation. It is also called leverage.Money borrowed.

 Distribution: Refers to selling often coincident with market tops or consolidations. It also refers to the Liquidation, partial or entire, by insiders, control people, or major investors. The term also refers to a disbursement out of a retirement plan or mutual fund.

 
 Related Terms
 Involuntary liquidation preference
Liquidation rights
Liquidation value
Liquidation value per share

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