In the case of a failing company, the first claim to the company's assets lies with:
A) the state governments.
B) the creditors of the company.
C) the owners of the company.
D) the managers of the company.

Question

Quizplus · Accepted Answer

When a company fails, the first claim to the company's assets belongs to its creditors. Creditors can include suppliers, lenders, and bondholders who have provided financing to the company. In a bankruptcy, for example, creditors are typically paid before the owners of the company.  The state government may have a claim if the company owes back taxes, but this would come after the claims of the creditors have been satisfied. The owners and managers of the company are considered equity holders and are last in line to receive any assets from the company's liquidation.

In the Case of a Failing Company, the First Claim