What does funds liquidated mean

Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. Liquidate means converting property or assets into cash or cash equivalents by selling them on the open market. Liquidation similarly refers to the process of bringing a business to an end and distributing its assets to claimants. Liquidation of assets may be either voluntary or forced.

Voluntary liquidation may be affected to raise the cash needed for new investments or purchases or to close out old positions. A forced liquidation may be used in bankruptcy procedures, in which an entity chooses or is forced by a legal judgment or contract to turn assets into a liquid form cash. Liquidation can also refer to the process of selling off inventory, usually at steep discounts.

It is not necessary to file for bankruptcy to liquidate inventory. In investing, liquidation occurs when an investor closes their position in an asset. Liquidating an asset is usually carried out when an investor or portfolio manager needs cash to re-allocate funds or rebalance a portfolio.

An asset that is not performing well may also be partially or fully liquidated. An investor who needs cash for other non-investment obligations — such as paying bills, vacation expenses, buying a car, covering tuition, etc.

Financial advisors tasked with allocating assets to a portfolio usually consider, among other factors, why someone wants to invest and for how long. An investor who wants to buy a home within five years may hold a portfolio of stocks and bonds designed to be liquidated in five years.

The cash proceeds would then be used to make a down payment for a home. The financial advisor would keep that five-year deadline in mind when selecting investments likely to appreciate and protect the capital for the investor.

Brokers may force certain customers to liquidate holdings in event of an unmet margin call. For example, a new, large-cap fund may not fit the needs of the shareholders whose liquidated fund was originally small-cap oriented. To liquidate a fund, the fund company may choose to sell the fund's assets outright if there isn't a well-fitting fund to merge into, and can then distribute sales proceeds to fund shareholders. Depending on what is in the fund's portfolio holdings and the market trading conditions at the time of the sale, the fund may be forced to sell its holdings at a loss.

Securities that are not widely traded may be hard to sell, especially when a fund dumps its often large holdings at one time. Unless the fund company arranges the asset sales in an orderly manner, shareholders may incur investment losses from a fund liquidation. Personal Finance Debt. What Does Funds for Liquidation Mean? Sign Up. Income Tax Filing. Expert Assisted Services. Tax Saving. Mutual Fund Investments. GST Software. TaxCloud Direct Tax Software.

Need Help? The judge handling the petition then decides and makes a ruling on whether it is appropriate to order a liquidation. When the liquidation is done, the company begins the process of dissolving.

In a compulsory liquidation, a petition is often filed by a creditor. However, the directors, shareholders, or even the company itself can seek to have a company put into a compulsory liquidation. When liquidation is carried out and a company closes, there can be several advantages.

Outstanding debts are written off, providing an opportunity to move on rather than having the entire investment swallowed up by existing debts. If legal processes have been initiated by creditors, the process of liquidation halts them, terminating legal actions against the company. Another advantage is that leases and purchase agreements can be canceled. The companies making such claims can recover their investments from the insolvency practitioners, together with other creditors.

With liquidation, all business assets are sold off to settle all debts.