Liquidating assets for
Businesses that want to raise cash for spending can attempt to sell their assets to other businesses.
Individuals can sell investments on the open market or sell property through a broker, as in the case of real estate.
In the simplest terms, this means selling the position for cash; another approach is to take an equal but opposite position in the same security—for example, by shorting the same number of shares that make up a long position in a stock.
A broker may forcibly liquidate a trader’s positions if the trader’s portfolio has fallen below the margin requirement, or she has demonstrated a reckless approach to risk-taking.
It is not necessary to file for bankruptcy to liquidate inventory.
Liquidation can also refer to the act of exiting a securities position.
In such cases, investors in preferred stock have priority over holders of common stock.