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Liquidated and ascertained damages

Damages specified in a contract representing a genuine pre-estimate of compensation due for an anticipated breach of contract, (e.g. delay in completion). They are usually expressed in agreed sums per week. Liquidated damages are only levied when reasons for delay do not entitle the party concerned to an extension of time. Liability insurers specifically exclude any liability to pay liquidated damages or penalties.

Liquidated damages

MEDICAL,USA: Amount stipulated in a contract that estimates a value to be recovered by an individual if the other party breaches. The sum is a measure of damages for a breach, whether it exceeds or falls short of the actual damages.
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Damages that are agreed to either by the court or by the parties to a suit or action.
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Specific sum of money which has been expressly stipulated by the parties to a contract as the amount of damages to be recovered by any party for a breach of the agreement by the other(s).

Liquidation

(i) The process of realizing the assets and quantifying the liabilities of a company which it is proposed to dissolve. The court, on petition, may order the provisional liquidation of a company, in which case it may be resuscitated. Otherwise the court will issue an order for voluntary or compulsory liquidation. (ii) The finalization of a customs entry.
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US: Dissolving a company by selling its assets for cash.
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UK: Legal process of winding up insolvent companies. The liquidator endeavours to recover the maximum sums due to the company for the benefit of the creditors and other stakeholders. He may recover from the directors if they are personally liable to the company for any breach of duty. Liquidators have to carry out their duties with skill and care. Special enabling bonds are available for insolvency practitioners so that cover becomes automatic whenever needed. Liquidation may lead to claims under a directors’ and officers’ liability insurance.
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MEDICAL,USA,REFERENCE: See: liquidation proceeding .

Liquidation of Insurer

Action undertaken the Competent Regulatory Authority to dissolve an impaired or insolvent insurer which cannot be restored to sound financial standing.
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Dissolution of an insurer who can no longer meet financial obligations and will not be able to meet them in the future.

Liquidation proceeding

Course of action of converting all assets into cash and paying all outside creditors according to the order of their preference and distributing what is left over to the owners in proportion and in the order of preference of ownership. Also called liquidation .

Liquidity

Liquidity is the ability of an individual or business to quickly convert assets into cash without incurring a considerable loss. There are two kinds of liquidity: quick and current. Quick liquidity refers to funds – cash, short term investments, and government bonds – and possessions which can immediately be converted into cash in the case of an emergency. Current liquidity refers to current liquidity plus possessions such as real state which cannot be immediately liquidated but eventually can be sold and converted into cash. Quick liquidity is a subset of current liquidity. This reflects the financial stability of a company and thus their rating.
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The conversion of the insurer’s non-monetary assets into cash with which claims can be paid.

Liquidity ratio

A measurement of key financial variables that impact an insurer’s ability to pay claims. In the Insurance Regulatory Information System (IRIS), liabilities to liquid assets and agent’s balances to surplus are monitored.