liquidate

To liquidate assets means to convert non-liquid assets into liquid assets by selling them on the open market. An individual or company can voluntarily liquidate an asset , or can be forced to liquidate assets through the bankruptcy process.

Voluntary liquidation can happen when the individual or business needs cash to either fulfill other investment or non-investment obligations, or to reallocate funds, etc.

Liquidating assets in the bankruptcy process can happen when a creditor liquidates a debtor ’s assets to collect debt. This process usually is handled by a court officer, often a sheriff , through power given by a writ of execution from the court. The sheriff would first take the assets of a debtor through garnishment. If the asset is non-liquid, the sheriff  will sell it, usually in a public auction in the court, and will give the creditor the owed cash from this sale, while the rest goes back to the debtor.

[Last reviewed in July of 2020 by the Wex Definitions Team ]

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