The repayment schedule and maturity of a self-liquidating loan are designed to coincide with the timing of the assets' income generation.
These loans are intended to finance purchases that will quickly and reliably generate cash.
The company’s operations are brought to an end, and its assets are divvied up among creditors and shareholders, according to the priority of their claims. Not all bankruptcies involve liquidation; Chapter 11, for example, involves rehabilitating the bankrupt entity and restructuring its debts.
Liquidation is the process of bringing a business to an end and distributing its assets to claimants.
Self-liquidating loans are not always a good credit choice.
If your CD hasn't matured yet, you're going to have to pay a penalty to get your money out of the account.
Collins English Dictionary - Complete & Unabridged 2012 Digital Edition © William Collins Sons & Co.
In finance and economics, liquidation is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations as and when they come due. Bankruptcy Code governs liquidation proceedings; solvent companies can also file for Chapter 7, but this is uncommon.
Bank assets fall because of the defaults and because the value of their collateral falls, leading to a surge in bank insolvencies, a reduction in lending and by extension, a reduction in spending: the credit cycle is the cause of the economic cycle.
The theory was developed by Irving Fisher following the Wall Street Crash of 1929 and the ensuing Great Depression.