In a corporate liquidation, which of the following ranks highest in the statutory order of payment?

Answer options:

Unsecured creditors

Preferential creditors (e.g., employee wages)

Floating charge holders

Fixed charge holders

How to approach this question

Recall the statutory hierarchy of payouts in liquidation.

Full Answer

D.Fixed charge holders✓ Correct

The statutory order of payment in liquidation is: 1) Fixed charge holders (from the specific asset), 2) Expenses of liquidation, 3) Preferential creditors (e.g., employee wage arrears, certain HMRC debts), 4) Floating charge holders, 5) Unsecured creditors, 6) Shareholders.

Common mistakes

Placing preferential creditors or liquidator expenses above fixed charge holders.

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