In a liquidation, which of the following is paid first from the realization of assets?

Answer options:

Preferential creditors (e.g., employee wages).

Holders of floating charges.

Holders of fixed charges.

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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Practice the full ACCA LW — Corporate and Business Law Practice Exam 1

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In a liquidation, which of the following is paid first from the realization of assets?

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA LW — Corporate and Business Law Practice Exam 1

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