liquidate

Liquidate is a verb with several related meanings. In general, it means to convert something into a liquid state or, more commonly in finance and business, to convert assets into cash by selling them. The term is often used to describe the end of an enterprise or the process of turning investments into cash.

Asset liquidation refers to converting noncash assets into cash, typically to pay debts or meet obligations. It can be voluntary, such as a members’ voluntary liquidation for a solvent company or a creditors’ voluntary liquidation when the company is insolvent, or compulsory, initiated by a court. A licensed liquidator manages the process, realizes assets, pays costs, and distributes funds to creditors and shareholders as permitted by law.

Distributions follow a statutory order: secured creditors first, then preferential creditors, unsecured creditors, and finally shareholders. The process culminates in dissolution of the company.

Liquidation can also refer to reducing a position or exiting a market in finance, or more rarely, to eliminating a liability. In informal usage, "to liquidate someone" may mean to kill them; this slang sense is inappropriate in formal writing.

Etymology: from Latin liquidatus, past participle of liquidare, from liquidus "fluid".