The difference between liquidation and reorganization is that a:

		liquidation deals with net working capital while a reorganization deals with long-term liabilities.
		liquidation terminates all operations and a reorganization maintains the option of the firm as a going concern.
		a liquidation must occur outside of bankruptcy while a reorganization involves the bankruptcy process.
		reorganization terminates all operations of the firm while a liquidation only terminates non-profitable operations.
		liquidation terminates all operations immediately while a reorganization terminates operations over two, or more, years.