Asset stripping involves selling the assets of a business individually at a profit.
The term is generally used in a pejorative sense as such activity is not considered productive to the economy. Asset stripping is considered to be a problem in economies such as Russia or China that are making a transition to the market. In these situations, managers of a state-owned company have been known to sell the assets which they control, leaving behind nothing but debts to the state.
In Insolvency Law, asset stripping is an illegal practice whereby the assets of a company are sold below market price to another company or individual in order to deny their value to creditors when the original company is liquidated. Essentially, it is a fraud against creditors and shareholders, by selling assets or security below market value to another person.
In the period preceding the Economic crisis of 2008, managers of Wall Street investment banks and insurance companies conducted a variation of this practice by selling promises to pay in case of default to third parties in the form of derivatives (credit default swaps), claiming that the probability of ever actually having to pay was near zero.
Firms reported virtually all of the proceeds of these commitments to pay as income, maintaining little or no capital reserve against eventual claims, which then triggered massive bonuses for "profits" that later turned out to be ephemeral.
Wall Street bonuses created through this manipulation amounted to $33.7 billion in 2007<1>, which followed a similar amount paid out in 2006. Roughly $160 billion in assets were stripped this way from Wall Street firms between 2001 and 2007, leaving the firms empty shells with little or no capital remaining, but debts of historic proportions, leading to their eventual collapse, and the ruin of millions of shareholders.
http://en.wikipedia.org/wiki/Asset_stripping.