In the event that a firm goes bankrupt and is liquidated, who is paid off first, second, and third between workers, debt holders, and stockholders?

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In a bankruptcy liquidation, workers (employees) are typically prioritized for payment due to their wages being considered a priority debt. Debt holders or creditors come next as they have lent money to the firm with the expectation of repayment. Stockholders or shareholders are paid last because they are essentially owners of the company and take on the risk of ownership, meaning they only receive residual claims after all debts have been paid.

In the Event That a Firm Goes Bankrupt and Is