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Simple English definitions for legal terms
distribution in liquidation
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A quick definition of distribution in liquidation:
Distribution in Liquidation: When a company or partnership is closing down, they may distribute their assets to their shareholders or partners. This is called a liquidating distribution. It means that the company is selling off everything it owns and giving the money to the people who own a part of the company. This is different from a nonliquidating distribution, which is when a company gives some of its assets to its shareholders or partners but continues to operate.
A more thorough explanation:
Distribution in liquidation is the process of dividing the assets of a business that is closing down and distributing them to its owners or shareholders. This is also known as a liquidating distribution.
For example, if a company decides to shut down, it will sell off its assets and pay off its debts. After that, any remaining money or property will be distributed among the shareholders. This is a liquidating distribution.
Another type of distribution is a nonliquidating distribution, which is when a company distributes excess capital to its shareholders without closing down.
Overall, distribution in liquidation is the process of dividing a company's assets among its owners when it is closing down.