What is the process of liquidation aimed at?

The process of liquidation is specifically aimed at selling off assets to pay debts. This typically occurs when a business is facing financial difficulties and is unable to meet its liabilities. During liquidation, the company’s assets are evaluated, and these assets are then sold to generate cash. This cash is used to settle outstanding debts and obligations to creditors.

In this context, liquidation serves as a method to systematically wind down a company’s operations. The goal is not to generate profit or expand the business, but rather to ensure that as much as possible of what is owed to creditors is recovered through the sale of owned assets. Liquidation is usually a last resort, and it can involve selling everything from property and equipment to inventory.

The focus on paying off debts emphasizes the financial distress situation that prompts liquidation, distinguishing it from other processes that might involve growth or acquisition strategies.