LIQUIDATION (i.e. making " liquid " or clear), in law, the clearing off or settling of a debt. The word was more especially used in bankruptcy law to define the method by which, under the Bankruptcy Act 1869, the affairs of an insolvent debtor were arranged and a composition accepted by his creditors without actual bankruptcy. It was abolished by the Bankruptcy Act 1883 (see BANKRUPTCY). In a general sense, liquidation is used for the act of adjusting debts, as the Egyptian Law of Liquidation, July 1880, for a general settlement of the liabilities of Egypt. In company law, liquidation is the winding up and dissolving a company. The winding up may be either voluntary or compulsory, and an officer, termed a liquidator, is appointed, who takes into his custody all the property of the company and performs such duties as are necessary on its behalf (see COMPANY).
Note - this article incorporates content from Encyclopaedia Britannica, Eleventh Edition, (1910-1911)