Which of the following statements is true about the order of repayment for a company in liquidation?
A)creditors rank before ordinary shareholders.
B)ordinary shareholders rank before preference shareholders.
C)wages owing to employees rank last.
D)All of the statements are true.

Question

Quizplus · Accepted Answer

In liquidation, creditors have priority over shareholders in terms of repayment because they are owed money and have a legal claim on the company's assets. Preference shareholders have priority over ordinary shareholders, but both classes of shareholders rank behind creditors. Wages owing to employees are typically considered a priority debt and are therefore paid before any other unsecured creditors.

Which of the Following Statements Is True About the Order