For mature private equity portfolios, the investor’s net cash flow is likely to be positive, indicating that distributions are larger than capital calls.
In these cases, liquidation refers only to non-exempt property, including second homes and non-retirement investments.
Asset liquidation is also an important part of the bankruptcy process.
Chapter 7, also known as liquidation bankruptcy and available to both private individuals and businesses, allows a court to appoint a trustee who sells off, or liquidates, the bankrupt party's assets and pays the proceeds to creditors.
They are the opposite of debts, which signify money that is owed.
When debts start to outweigh assets or become more than a business or individual can afford to repay, it may be necessary to liquidate assets in order to remain financially stable.