# Liquidation The code for determining which Vaults get liquidated lives within the vaultFactory. This code deals with ordering Vaults for liquidation, passing them to an auctioneer, burning IST raised for debt, and distributing additional penalties, proceeds, and/or shortfall to the reserve and/or to vault holders. The Vault Manager distributes proceeds, penalties, and/or shortfall to the protocol reserve and possibly back to vault holders depending on the results of the specific liquidation. For more detail, see: --- # 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.inter.trade/inter-protocol-system-documentation/liquidation.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.