Any interest owed on the amount of the loan is also included in the liquidated debt amount.Another type of liquidated debt is legal judgements.They will sell to a company that specializes in store liquidation instead of attempting to run a store closure sale themselves.
During the busy season when business is booming the company needs to borrow money to finance short-term assets such as inventory and accounts receivable.
The company borrows money to buy more materials to take advantage of the increasing demand of the busy season.
Commercial papers are unsecured promissory notes that are issued by corporations.
These notes have a fixed maturity that is usually less than a year in length.
Then when business slows down the company will have less of a need for borrowed funds to finance short-term assets like inventory accounts – the need for financing will decline as the need for inventory declines. “Analysis for Financial Management”, Mc Graw-Hill Irwin, New York, NY, 2007.
At this point, the company will have generated profits from the busy season, and will now be able to use those profits to repay the loans it took out to finance operations during the busy season. See Also: Loan Agreement Collateralized Debt Obligations When is an interest rate not as important in selecting a loan?
The amount due on these money market securities is also a form of liquidated debt, as the amount due is clearly specified in the commercial paper.
Liquidated debt can also mean a debt that has been settled or paid up entirely.
It can take account of personal relationships of mutual trust and confidence in small parties, particularly, for example, where there is a breach of an understanding that all of the members may participate in the business, Upon hearing the application, the court may either dismiss the petition, or make the order for winding-up.
The court may dismiss the application if the petitioner unreasonably refrains from an alternative course of action.
For example, if you are sued in court for monetary damages, the amount of damages owed is liquidated debt, but the debt only becomes liquidated once the jury or judge determines the amount of money owed.