When a company that has gone public (issued and sold shares on the stock exchange) will stop its business either for legal reasons or other reasons, then the company will sell all assets to pay debts such as employee salaries, bonds, short-term debt or long-term debt etc. The balance from the sale of assets after deducting debt payments will be distributed to shareholders in the form of the principal value of the shares plus dividends. This dividend is known as a liquidation dividend.
