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In 2008, the United States began to witness one of the worst recessions since the 1930s. The collapse of the housing bubble in 2006 led to a massive decline in real estate prices, affecting consumers and institutions, especially banking and financial entities. Severe liquidity shortfalls in the United States as well as other global markets led to a serious credit crisis. During the credit crisis of 2008–2009, several banks and other businesses went through a reorganization process or were forced to liquidate. Consider the following example:________.
In January 2009, American electronics retailer Circuit City Inc. closed all of its stores and sold all of its merchandise.
The above is an example of:______.
A. Reorganization
B. Liquidation.

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Answer:

B. Liquidation.

Explanation:

Liquidation is and aftermath of the inability of a company or establishment to meet up with her obligations at the required moment. Thus, the company folds-up, lay off her staff and stop operating. While reorganization is a form of restructuring in a company or establishment. It may involve change of positions and duties among capable staff.

The example in the given scenario is that of liquidation because it ceased from operation.

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