Also known as liquidate. In bankruptcy, the process of selling a debtor's property under Chapter 7 or Chapter 11 of the Bankruptcy Code with the proceeds to be distributed to creditors, but without continuing the debtor's business. A debtor may choose to liquidate under Chapter 11 rather than Chapter 7 because under the Chapter 11 process, the debtor can remain in control of the business, with the exclusive right to propose a plan of reorganization for the first 120 days (extendable to 18 months).