Section A

In a liquidation, which of the following debts is paid first from the company's realized assets?

Answer options:

Unsecured creditors.

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

The expenses of the liquidation.

Floating charge holders.

How to approach this question

Recall the statutory order of priority in a winding up.

Full Answer

C.The expenses of the liquidation.✓ Correct

The statutory order of payment in liquidation is: 1) Fixed charge holders (from the specific asset), 2) Expenses of the liquidation, 3) Preferential creditors, 4) Prescribed part (for unsecured creditors), 5) Floating charge holders, 6) Unsecured creditors, 7) Interest, 8) Shareholders.

Common mistakes

Assuming employees (preferential creditors) are paid before the costs of the liquidation itself.

Question 41 All questions Question 43

Practice the full ACCA LW — Corporate and Business Law Practice Exam 5

60 questions · hints · full answers · grading

More questions from this exam

Q01Section A In the context of the English legal system, an AI ethics consultancy is appealing a de...Medium Q02Section A A statute regulating commercial drone flights was drafted in 2015. A new case involves...Medium Q03Section A Under the Human Rights Act 1998, what is the legal effect if a UK court finds that a p...Medium Q04Section A NovaTech Ltd offers to sell a batch of quantum processors to Q-Compute Plc. Q-Compute ...Medium Q05Section A During a severe economic downturn, a landlord agrees to accept half rent from a commer...Hard

View all 60 questions →