what is liquidating 
the term 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 enacted 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 i e cash liquidation can also refer to the process of selling off inventory usually at steep discounts it is not always necessary to file for bankruptcy to liquidate inventory as a company may elect to do so to make way for newer items understanding liquidationin 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 reallocate 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 may opt to liquidate their assets 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 margin callsbrokers may force certain customers to liquidate holdings in the event of an unmet margin call this is a request for additional funds that occurs when the value of a margin account falls below a certain threshold required by their broker due to investment losses if a margin call is not met a broker may liquidate any open positions to bring the account back up to the minimum value they may be able to do this without the investor s approval this effectively means that the broker has the right to sell any stock holdings in the requisite amounts without letting the investor know furthermore the broker may also charge an investor a commission on these transaction s this investor is held responsible for any losses sustained during this process 