Which term describes the process of selling assets to pay debts?

• A. Liquidation
• B. Bankruptcy
• C. Voluntary Administration
• D. Involuntary Cessation

Answer: (A)

Liquidation is the process of winding up an insolvent business by selling its assets to raise cash and repay creditors. The focus is on converting what the business owns into money to meet debts, and once the assets are sold and creditors paid, the company is typically dissolved. This makes liquidation the best description for selling assets to pay debts. Other options describe different insolvency paths: bankruptcy relates to individuals (or a separate regime for individuals), voluntary administration aims to rescue or restructure the business rather than just liquidate assets, and involuntary cessation involves stopping operations, not a structured sale of assets to satisfy liabilities.