ExpertEasy1 markMultiple Choice
ACCA · Question 43 · Corporate and Business Law
In a corporate liquidation, which of the following ranks highest in the statutory order of payment?
In a corporate liquidation, which of the following ranks highest in the statutory order of payment?
Answer options:
A.
Unsecured creditors
B.
Preferential creditors (e.g., employee wages)
C.
Floating charge holders
D.
Fixed charge holders
How to approach this question
Recall the statutory hierarchy of payouts in liquidation.
Full Answer
D.Fixed charge holders✓ Correct
The statutory order of payment in liquidation is: 1) Fixed charge holders (from the specific asset), 2) Expenses of liquidation, 3) Preferential creditors (e.g., employee wage arrears, certain HMRC debts), 4) Floating charge holders, 5) Unsecured creditors, 6) Shareholders.
Common mistakes
Placing preferential creditors or liquidator expenses above fixed charge holders.
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