Detroit Business Daily

What does it mean when a company such as GM liquidates?

What does it mean when a company such as GM liquidates? I am not too familiar with the concept of liquidation. Is GM at risk of bankruptcy or is it bankrupting? Can someone explain this term to me in a simple way? I hear things about old GM and new GM which has confused me about this term because I thought once a company liquidates they are at risk of being bankrupt or going towards that area. But they can revive themselves with a new corporation/New GM?

Public Comments

1. The word liquidation comes from the term "liquid", which refers to how easily transferable an asset is to cash. So to liquidate means to quickly "turn" cars into cash, or sell them. A liquidation usually consists of a huge sale with vehicles for sale at hugely reduced prices. When a car company liquidates their inventory, they could do it for a number of reasons. They may actually need the money, or they may just need to clear space off of their lot.