Liquidation

Formal

The process of winding up the affairs of a company or business by determining (or fixing) the liabilities and applying all assets as far as possible in the discharge of these liabilities. Simply, it’s the company termination or liquidation procedure - and there isn’t usually a surplus! Called Chapter 7 in the USA

Real-world Example

A company can't pay its creditors and has no realistic prospect of recovery, so it's put into liquidation - its assets are sold off and the proceeds distributed to creditors before the company is formally closed.