The first item in order of payment to be made by liquidator is: Liquidation expenses secured creditor preferential creditor Preference shareholder
Question
The first item in order of payment to be made by liquidator is: Liquidation expenses secured creditor preferential creditor Preference shareholder
Solution
The first item in order of payment to be made by a liquidator is Liquidation expenses.
Here is the step by step explanation:
-
Liquidation Expenses: These are the costs associated with winding up the company. This includes professional fees such as those for lawyers and accountants, as well as any other costs directly related to the liquidation process. This is the first priority for payment in a liquidation.
-
Secured Creditors: These are creditors who have a charge over a company's assets. This means that if the company cannot pay its debts, these creditors have the right to sell the assets over which they have a charge in order to recover their money. They are the second priority for payment.
-
Preferential Creditors: These are typically employees of the company who are owed wages, holiday pay, redundancy pay etc. They are the third priority for payment.
-
Preference Shareholders: These are shareholders who have a right to a fixed dividend before any dividend is paid to ordinary shareholders. They are the last priority for payment in a liquidation.
Similar Questions
In the event of a company liquidation, which of the following will have the highest priority claim over the company’s assets?Providers of unsecured debtProviders of secured debtOrdinary shareholdersPreference shareholders
This type of liquidation occurs when the assets are sold as quickly as possible, much like an auction.a.Creditor`s liquidationb.Forced liquidationc.Orderly liquidationd.Solvent liquidation
In relation to a company, generally, creditors are least concerned with:Its future share priceIts short-term liquidityIts solvencyIts profitabilityCreditors are concerned aboutall of the above
A company can manage liquidity by: a. using one bank, b. spacing liabilities, c. borrowing only short-term Group of answer choicesmanaging solvencyspacing liabilitiesreducing liquidityminimizing enterprise value
Examine the role of a provisional liquidator during the winding-up process. A. The provisional liquidator takes over the company's operations permanently. B. The provisional liquidator is appointed by shareholders during voluntary winding up. C. The provisional liquidator is a temporary appointment to safeguard the company's assets during the interim period. D. The provisional liquidator is responsible for finalizing the distribution of assets to creditors.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.