What is a forced liquidation?

A forced liquidation may be used in bankruptcy procedures, in which an entity chooses or is forced by a legal judgment or contract to turn assets into a liquid form (i.e., cash). Liquidation can also refer to the process of selling off inventory, usually at steep discounts.

What is forced liquidation value (FLV)?

The Forced Liquidation Value (FLV) or Forced Sale Value (FSV) is the proceeds received from the sale of these distressed assets, which are used to pay off the debt. The opposite of forced selling in a margin account is a forced buy-in.

What is liquidation in banking?

Liquidation is the process of closing a business and distributing its assets to claimants. The sale of assets is used to pay creditors and shareholders in the order of priority. Liquidation is also used to refer to the act of exiting a securities position, usually by selling the position for cash.

What is liquidation & dissolution?

Liquidation or dissolution is the method of dissolving a firm’s identity by selling its assets to settle liabilities. Shareholders and owners take home what is left of it. Dissolution is mainly classified into forced and voluntary. In a forced dissolution, the court orders the shutdown via the sale of the firm’s assets.