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A liquidating distribution refers to the return of capital to shareholders during the process of dissolving a company, either through bankruptcy, acquisition, or voluntary liquidation. When a company is liquidated, its assets are sold, and the proceeds are used to repay creditors first. Any remaining funds are then distributed to shareholders as a liquidating distribution. These payments are typically made in proportion to each shareholder’s ownership stake.
When a company is dissolved, its remaining assets are sold, and after paying off creditors, the remaining $1 million is distributed to shareholders based on their ownership percentages.
• A return of capital to shareholders when a company is dissolved or liquidated.
• Proceeds from asset sales are first used to repay creditors, with the remainder distributed to shareholders.
• Payments are made in proportion to each shareholder’s ownership stake.
It is a return of capital to shareholders during the dissolution or liquidation of a company, typically after creditors have been paid.
They are calculated based on the proceeds from asset sales and distributed to shareholders in proportion to their ownership stake.
Creditors are paid first from the proceeds of asset sales before any remaining funds are distributed to shareholders.
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