Liquidating partner definition webster, etymologies
Liquidation refers to the selling of assets in return for cash. However, the steps preceding liquidation usually involve bankruptcywhich -- at the individual level -- virtually ruins a person's credit for several years, making it very difficult and expensive to borrow money in the future.
Each partner's share depends on the amount of money in the partner's capital account, which is a record of the amount the partner invested and his current level of ownership in the business. Most of the time these assets will create a loss because they will be sold for less than what the partnership purchased them for, but some assets, like building, can appreciate and be sold at a gain.
Other times, partnerships go bankrupt and are forced to liquidate in order to pay off their creditors.
Definition of a Liquidating Partnership
In Chapter 7, a company ceases operations, and the appointed trustee liquidates the company's assets in order to repay its debts. We examine this new actively managed offering by the world's largest mutual fund provider.
For businesses, liquidation usually means closing for good and selling off all the assets.
Learn what happens when an ETF fails. Once all the partnership has no remaining assets or liabilities, the partners can close the bank accounts and file dissolution papers with the applicable government agencies to legally dissolve the partnership.
In most cases, the court also requires proof that the individual has obtained credit counseling. The money received from selling the assets goes to pay the debts the company owes, even if the company sells the assets for less then their worth.
The trustee handles the liquidation and determines which creditors are paid first. Most companies do not file Chapter 7 until they've been unsuccessful with a Chapter 11 filing, which lets them attempt to restructure the company and restore the ability to service debt.
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