If bankruptcy were to occur, ________ would have the first claim on assets.
A) preferred stockholders
B) unsecured creditors
C) equity stockholders
D) secured creditors

Question

Quizplus · Accepted Answer

Secured creditors have the first claim on the assets in the event of bankruptcy because they have a specific lien on the assets backing their loan. This means that if the company defaults on their loan, the secured creditor can seize and sell the assets to recover their loan amount. Preferred stockholders, equity stockholders, and unsecured creditors have a lower priority in the distribution of assets during bankruptcy.

If Bankruptcy Were to Occur, ________ Would Have the First