Definition of self liquidating debt

Unlike when individuals file for Chapter 7 Bankruptcy, the business debts still exist.

Appropriate Capital is capital that meets the needs of the investors and fits the specific business model of the entrepreneur so that the capital structure does not hinder the prospect of success.

Alternative exits are often contingent payment structures as they often are designed so that the timing of the payment to investors are contingent on aspects of the issuer’s business.

For example, revenue-based structures payout periodic investor returns as a percentage of period revenues and thus the payment amount is contingent on revenues.

Liquidation can also refer to the act of exiting a securities position.

In the simplest terms, this means selling the position for cash; another approach is to take an equal but opposite position in the same security—for example, by shorting the same number of shares that make up a long position in a stock.

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Finally, shareholders receive any remaining assets, in the unlikely event that there are any.

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