GLOSSARY

LIQUIDATE

31 January 2017 By PDSNET

To settle the affairs of a company by selling assets in order to pay creditors also known as a "dissolution". The court, the company itself, a shareholder, the Master of the court, the business rescue practitioner, a creditor, or the minister may initiate such dissolution. Usually, a business rescue practitioner is appointed, who, if the company cannot be rescued, a liquidator is appointed who arranges to sell off all the assets of the company and uses the proceeds to pay its creditors (firstly the secured creditors and then the unsecured ones). Once the creditors have been paid then the preferential shareholders are paid, and then finally the ordinary shareholders are paid. When an individual cannot pay his or her creditors the process is known as an insolvency.

The term "liquidity" when used in relation to a  share can be judged by the volume of shares traded on average each trading day. 

 

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