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Simple English definitions for legal terms
liquidate
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A quick definition of liquidate:
Term: Liquidate
Definition: Liquidate means to sell things that you own in order to get money. Sometimes people or companies choose to sell things they own because they need money for other things. Other times, people or companies are forced to sell things they own because they owe money to someone else. When this happens, a court officer called a sheriff will sell the things and give the money to the person or company that is owed money.
A more thorough explanation:
Definition: To liquidate assets means to sell non-liquid assets on the open market to convert them into liquid assets. This can be done voluntarily or through the bankruptcy process.
Example 1: An individual may choose to liquidate assets to get cash for other obligations. For example, if someone needs money to pay for medical bills, they may sell their non-liquid assets like a car or jewelry to get cash quickly.
Example 2: In the bankruptcy process, a creditor may force a debtor to liquidate assets to collect debt. For instance, if someone owes money to a bank and can't pay it back, the bank may go to court to get a writ of execution. This gives the sheriff the power to take the debtor's assets and sell them to pay off the debt.
Both examples illustrate how liquidating assets involves selling non-liquid assets to get cash. In the first example, the individual chooses to do it voluntarily, while in the second example, it's done through the bankruptcy process.