What is liquidation?
Liquidation generally refers to the process of selling off a company’s inventory, typically at a big discount, to generate cash. In most cases, a liquidation sale is a precursor to a business closing. Once all the assets have been sold, the business is shut down.
In the accounting world, liquidation refers to the process of selling all of a company’s assets to generate cash to pay off creditors, or anyone the company owes money to. (Source: Shopify)