Two meanings to distinguish
Asset liquidation means selling assets to realize cash. It may occur during an ordinary asset sale, a solvent wind-down, or an insolvency proceeding.
Collections liquidation rate is a portfolio metric. One useful definition is net cash collected from a placement cohort divided by that cohort's original placed balance, multiplied by 100. The denominator, time window, fees, and treatment of reversals must be specified.
Neither meaning should be confused with liquidity, which concerns access to cash and the ability to meet obligations.
Business liquidation and creditor claims
In U.S. Chapter 7, a trustee generally administers nonexempt assets and distributions under bankruptcy law. A filing does not guarantee that assets are available or that creditors will recover their full claims. See the U.S. Courts' Chapter 7 overview.
Personal guarantees, liens, entity type, and court orders can affect the outcome. Selling assets or closing a business does not automatically eliminate every liability.
Example of a liquidation rate
A defined cohort begins with $100,000 placed. By day 90, it has produced $12,000 of collections, less $1,000 of reversals. Under a net-cash definition, its 90-day liquidation rate is 11%.
Compare cohorts using the same balance basis and observation period. Settlement discounts and accounting write-offs are not cash collections.
Related terms: Collateral and Bankruptcy Discharge.