Blockchain Glossary

Forced Liquidation

Published on August 30th, 2021

A situation in which an outside party can force the sale of an asset belonging to another. For example, a bank may force a borrower to sell his/her collateral in order to repay the debt.

Likewise, a brokerage can force a client to sell securities if the client is unable to meet a margin call and preferred stockholders can (sometimes) force the liquidation of a publicly-traded company if it does not make preferred dividend payments.