Liquidations usually result in losses for the following reasons:

- Assets typically have characteristics which make their value in existing uses greater than when resold.

- The organizational value of a company is lost when liquidation takes place.

- Because the claims of numerous parties must be adjudicated, considerable administrative, accounting, and legal costs may be incurred.

Partial liquidation over a period would have the following results:

- Probably would not decrease losses.

- Failure to institute the necessary operating and management changes might cause losses to continue and might cause further deterioration in the value of the company. It is often said that a swift major "surgery" for a business firm is preferred to an extended illness.