# liquidate() and declareInsolvent() ### `liquidate()` A bespoke approach is taken wish the aim to avoid automatic liquidations. We believe in a process for restructuring debt or in giving borrowers time to top up collateral or add additional revenue streams to the Spigot. The Arbiter is responsible for initiating and executing liquidations. This privileged function can only be executed when the loan status is liquidatable, triggered for example when the escrowed token collateral account becomes undercollateralized (relative to the collateral ratio set for the loan) or when a Borrower fails to repay before the deadline. ### `declareInsolvency()` The Arbiter can declare that a Borrower is incapable of repaying debt any more than the current proceeds after liquidating the Borrower's collateral and/or claiming all of the Revenue Tokens in the Spigot. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.creditcoop.xyz/developer-material/v1-developer-material/arbiter/liquidate-and-declareinsolvent.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.