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Unformatted text preview: The Investopedia encyclopedia defines Liquidation as when a business or firm is terminated or bankrupt, and its assets are sold and the proceeds pay the creditors. Any leftovers are distributed to shareholders. And the legal definition to dissolution of a partnership is putting an end to the partnership agreement. And that dissolution does not affect contracts made between partners and others. So in dissolution, there is a major change in the relationship between partners and the partnership continues until the winding up of the partnerships affairs is completed. This means liquidation will most likely occur when there is dissolution, but dissolution does not have to occur when there is liquidation. A partnership can have many reasons for dissolution like mutual consent of the partners, death of partners, bankruptcy, etc.. The rules for dissolving a partnership will slightly differ depending on the reasons for the dissolution, but as a general rule, the whole firm and each member of it is...
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- Spring '11