What is typically one of the first steps taken during the liquidation process?

The liquidation process for a business involves winding down its operations and distributing its remaining assets to creditors and, if applicable, owners or partners. One of the first and most crucial steps in this process is assessing the value of the firm's assets. This evaluation is necessary to understand the overall financial standing of the business, determine how much can be paid to creditors, and what remains for any equity holders.

Assessing asset value provides a comprehensive picture of what exists in terms of cash, inventory, property, and other tangible and intangible assets. Accurate valuations are critical to ensure that all parties involved—creditors, partners, and any other stakeholders—are treated fairly and according to their entitlements during the liquidation.

Determining the fair market value of these assets allows for an organized approach in spreading out the proceeds from asset sales and can also inform decisions on the sale of specific assets. This assessment establishes the groundwork for the subsequent steps in the liquidation process, including satisfying outstanding debts and distributing residual assets.