What does liquidation mean when a company goes bankrupt? What are the words or phrases related to "liquidation"?

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Liquidation is a critical process that occurs when a company faces bankruptcy. It involves systematically selling all company assets to generate cash for paying creditors. This process ultimately leads to the complete dissolution of the company. The liquidation process follows specific steps. First, a bankruptcy court appoints a trustee to oversee the process. The trustee then inventories all company assets, sells them at fair market value, pays creditors according to legal priority, and finally dissolves the company completely. Several key terms are essential to understanding liquidation. Asset sale refers to converting company property into cash. Winding up means closing all business operations. Dissolution is the legal termination of the company. Insolvency describes the inability to pay debts. Creditor claims are formal demands for payment from those owed money. There are two main types of liquidation. Voluntary liquidation occurs when a company chooses to dissolve itself, typically through a shareholder vote. Involuntary liquidation is court-ordered, usually when creditors petition for bankruptcy due to the company's inability to pay debts. In the United States, this often involves Chapter 7 bankruptcy proceedings. In summary, liquidation represents the final chapter of a bankrupt company. The process systematically converts all assets to cash, pays creditors according to legal priority, and ultimately dissolves the company entirely. This results in job losses for employees, but ensures creditors receive maximum possible payment from available assets.