and how can it be illegal?
In: Economics
It means to sell off investments or possessions to convert them into cash. Examples of such things are stocks, bonds, and precious metals.
It means they’re selling their property/belongings/merchandise, often for less than what it is valued at for quick cash.
They are selling their assets because they need cash. “Liquidation” does not have to mean selling them quickly at discount prices, but usually that is the connotation: that for some reason, a person or a company has to wind up its affairs quickly, and so it needs to sell those assets as quickly as possible, often at sharply discounted prices.
For instance, someone might have to liquidate their retirement investments to pay off debts that have come due, or a company might be shutting down or going bankrupt, and therefore have to liquidate its assets.
An “asset” is anything that is owned by a person or company. The closer an asset is to being cash, the more “liquid” that asset is. Of course, cash is a liquid asset, and something like a check that can be easily converted into cash is nearly as liquid. A product made for consumers is less liquid, and the machinery used to make that product would likely be even less liquid than that, assuming the company does not have a current avenue to sell that machinery.
If someone is liquidating assets, they are selling non-cash assets for cash.
Since others have already explained the meaning I’ll just say there’s nothing illegal about it. However, it might appear suspicious. For instance if someone is out on bond and starts to liquidate their assets you might assume they’re planning to run.
Liquidating assets means selling assets for cash.
An asset is usually some sort of business, property, equipment, or cash equivalents (i.e. something you can sell quickly to turn into cash).
Liquidation by itself is not illegal. Legality comes into play when the person selling does not own the asset outright (e.g. a leased car), or signed contracts that stipulate rules and requirements around an asset sale (e.g. a business with multiple partners or owners), or is under court order to specifically not sell an asset or follow very specific guidelines to sell an asset (i.e. Chapter 11 bankruptcy, 363 sale, Chapter 7 liquidation, meet M&A requirements).
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