Liquidate

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DEFINITION of 'Liquidate'

1. To convert assets into cash or equivalents by selling them on the open market.

2. When an entity chooses or is forced by a legal judgment or contract to turn assets into a "liquid" form (cash).

BREAKING DOWN 'Liquidate'

1. An individual may choose to liquidate his or her possessions or investments to pay off creditors, convert assets to cash for spending or because the investments are not going to increase in value and the investor wants to re-allocate funds.

2. Businesses are best known to liquidate assets as a part of bankruptcy procedure, but the process can also be used by businesses to free up cash, even in the absence of financial hardship.

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