Duncan Corp. is declared bankrupt. The Royal Bank has a mortgage on its manufacturing plant. Ten employees have a claim for $1,000 each for unpaid wages for the week prior to bankruptcy. The trustee in bankruptcy's fees are $10,000. An unpaid supplier of steel has a claim for products supplied. What class of creditor are the employees?

Question

Quizplus · Accepted Answer

Employees with claims for unpaid wages are considered preferred creditors in bankruptcy proceedings, meaning they have priority over unsecured creditors but are subordinate to secured creditors.