Definition:
The liquidation price refers to the minimum price at which an investor must sell their asset in order to settle debts or cover losses. It is the price that ensures no further losses are incurred.
The liquidation price is the threshold at which an investor’s position is automatically sold by the exchange or broker to avoid additional losses. For instance, if an investor purchases 100 shares of a stock at $50 per share and sets a stop-loss order at $45, the position will be sold at the current market price if the stock drops to $45. In futures trading, if the price of a futures contract falls below a certain level, the exchange will close out the position at the current market price. The liquidation price is the price at which the position is closed out, and it serves to limit an investor’s losses and prevent them from exceeding their risk tolerance.
A liquidation price is the price at which an asset is sold in order to pay off debts or obligations.
The liquidation price is typically determined by a court or a bankruptcy trustee.
Any type of asset can be sold at a liquidation price, including real estate, vehicles, equipment, and inventory.
Yes, a debtor can object to the liquidation price if they believe it is too low or unfair.
Yes, a creditor can purchase the asset at the liquidation price if they are owed money by the debtor.
If the liquidation price does not cover all of the debts owed, the remaining debts may be discharged or the debtor may be required to pay them off through a payment plan.
Yes, a debtor can negotiate the liquidation price with the court or bankruptcy trustee.
The time it takes to determine the liquidation price can vary depending on the complexity of the case and the number of assets involved.
Yes, a debtor can appeal the liquidation price if they believe it is unfair or incorrect.
Any remaining funds after the debts are paid off may be distributed to the debtor or used to pay off other creditors.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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