ExpertEasy1 markMultiple Choice
ACCA · Question 40 · Corporate and Business Law
In a liquidation, which of the following is paid first from the realization of assets?
In a liquidation, which of the following is paid first from the realization of assets?
Answer options:
A.
Preferential creditors (e.g., employee wages).
B.
Holders of floating charges.
C.
Holders of fixed charges.
D.
Unsecured creditors.
How to approach this question
Recall the statutory order of priority in liquidation.
Full Answer
C.Holders of fixed charges.✓ Correct
In liquidation, the order of payout is: 1) Fixed charge holders (from their secured assets), 2) Expenses of liquidation, 3) Preferential creditors, 4) Floating charge holders, 5) Unsecured creditors, 6) Shareholders.
Common mistakes
Putting preferential creditors before fixed charge holders.
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