What is the Asset Liquidation Claim order? Achievable and PassPerfect give different answers. Achievable says Unpaid Wages and Taxes are first. PassPerfect and other sources say Secured Creditors come first. I have my test tomorrow, HELP!
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Achievable is the right one to go by! Pass perfect also has the right order, but is missing the Unpaid Wages and Taxes before it. Should be the following:
- Unpaid wages
- Unpaid taxes
- Secured creditors
- Unsecured creditors
- Junior unsecured creditors
- Preferred stockholders
- Common stockholders
You’ll most likely see this on the exam too. Be aware of the synonyms for the liquidation order too!
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I should add, PassPerfect goes in order of Secured Creditors, Unpaid Wages and Taxes, etc.
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Hi, we cover this in our Assets upon liquidation chapter:
This note is specifically relevant!
There can be some confusion from the order of unpaid wages & taxes vs. secured creditors, depending on the source of information. Secured creditors have first rights to the collateral backing the loan. The liquidation priority above applies if the collateral backing the loan is liquidated and does not cover the loan balance.
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