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 a liquidation process, creditors have first priority over ordinary shareholders for repayment. Preference shareholders usually have priority over ordinary shareholders but it depends on the terms of their share agreement. Wages owing to employees have priority over unsecured debts but they usually rank after all other expenses and debts have been paid. Therefore, only statement A is true.

Which of the Following Statements Is True About the Order