Fire-sale

A fire-sale is the rapid sale of goods at drastically reduced prices, often due to financial distress, bankruptcy, or a need to liquidate assets quickly. It is a desperate measure typically employed to generate cash flow and mitigate losses. The defining characteristic of a fire-sale is the urgency and the significant discounts offered, which often result in prices below the market value of the goods or assets. This can be a boon for buyers looking for bargains, but it also indicates a distressed seller and potential economic instability. The term is evocative of a literal fire, implying a need to act fast before everything is lost. The discounts are usually large and the selection is normally depleted in a short space of time due to the attractive prices being offered.

Fire-sale meaning with examples

• Following the company's unexpected bankruptcy filing, a fire-sale of all its remaining inventory was announced. Everything from office equipment to raw materials was discounted by up to 70% to quickly generate cash to pay creditors. This generated huge crowds, who scrambled for the best deals and saw the stock depleted within a few days. Though they were not in liquidation, buyers knew the seller was in trouble.
• When the bank faced a liquidity crisis, it initiated a fire-sale of its real estate holdings. The properties were offered far below their appraised value, with the goal of attracting buyers and quickly raising capital. Though it was not the best time to sell due to the poor market, they were forced to accept losing prices due to their predicament. They used these funds to cover their debts.
• After a major retail chain announced its closure due to a failed attempt at expansion, it conducted a fire-sale to clear out its stores before they shut down. This meant deep discounts on clothing, electronics, and furniture to move stock quickly. This sale attracted many customers who were interested in buying things at a fraction of the price.
• Faced with an economic downturn, the government of the nation put its bonds on a fire-sale. These are sold at a lower rate than the market price, and it shows a sign of weakness. Despite the losses they would be incurring, they needed cash in order to pay their bills.
• Due to poor weather, the fisherman needed to have a fire-sale on all his fish. These had to be removed before the fishing boats could be damaged. He had to offer the wares at a fraction of the price in order to shift all the goods quickly. This was a desperate measure and did have an effect on his bottom line