Which of the following is an incorrect priority of claims in the event of liquidation? (Note: The first item would be paid first.)
A) Secured creditors, wages due employees, unsecured creditor claims, common shareholders
B) Secured creditors, unsecured creditor claims, preferred shareholders, common shareholders
C) Secured creditors, administration expenses, common shareholders, preferred shareholders
D) Secured creditors, wages due employees, taxes due federal government, preferred shareholders

Question

Quizplus · Accepted Answer

In a liquidation event, the priority typically follows this order: secured creditors, administration expenses, wages due to employees, taxes due to the government, unsecured creditors, preferred shareholders, and finally, common shareholders. Option C incorrectly places common shareholders before preferred shareholders, which is not the standard priority in liquidation scenarios.

Which of the Following Is an Incorrect Priority of Claims