Which one of the following will generally have the highest priority when assets are distributed in a bankruptcy proceeding?
A) Consumer claims
B) Dividend payment to preferred shareholders
C) Company contribution to the employees' retirement account
D) Payment to an unsecured creditor
E) Payment of employees' wages

Question

Quizplus · Accepted Answer

Payment of employees' wages generally has the highest priority in a bankruptcy proceeding. This is due to the Bankruptcy Code's priority scheme, which places wages and benefits owed to employees at the top of the list for payment. Unsecured creditors, such as suppliers and customers with outstanding claims, are generally lower in priority for payment. Contributions to employee retirement accounts and dividends to preferred shareholders usually come after these priorities have been met. Consumer claims may also be lower in priority, depending on the circumstances of the bankruptcy case.

Which One of the Following Will Generally Have the Highest