Also, if the time period is unreasonably prolonged, the status of the entity may change from a liquidating trust.
Such conditions include, among other things, that the primary purpose of the trust is liquidation of the assets with no objective of carrying on a trade or business and the trust agreement should contain a fixed or determinable termination date. A "business trust" should be considered instead of a liquidating trust if the purpose of the trust is to carry on a trade or business.
The trustee takes control of the newly formed liquidating trust.
The role of the trustee of the liquidating trust is to administer and manage the liquidating trust, sell assets, pay creditors, resolve any claims and distribute any available funds to the beneficiaries of the trust.
This reserve could be held in the trust for any contingent liabilities as they become due.
A liquidating trust is a new legal entity that becomes successor to the liquidating fund.
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It may take several years for such assets to be converted into cash.