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04-Jun-2020 14:11

If a company is otherwise unable to pay its debts and isn't able to close the business in another way, a liquidation sale is the last ditch effort to drum up some cash to smooth the process.All proceeds from a liquidation sale must go to creditors and shareholders.

Businesses can try to liquidate inventory themselves or they can sell to liquidators, who then turn around and sell that inventory to other retailers.Thousands of businesses close their doors each year in the United States. Then that cash is used to pay off creditors and shareholders.