Week 12 - Order of Payment 1

Question 1

Who gets paid first?

Answer 1

Secured creditors with a fixed charge

Question 2

What gets paid second?

Answer 2

Costs of the liquidation

Question 3

Who gets paid third?

Answer 3

Preferential creditors

Question 4

Who gets paid fourth?

Answer 4

Secondary preferential creditors

Question 5

What is the order?

Answer 5

Secured creditors with a fixed charge
Costs of the liquidation
Preferential creditors
Secondary preferential creditors

Question 6

Secured creditors with a fixed charge

Answer 6

These creditors have a specific claim over identifiable assets, such as property, machinery, or vehicles. They are first in line to recover their debts by selling these assets

Question 7

Costs of the liquidation

Answer 7

This includes the fees and expenses of the liquidator, who is responsible for managing the liquidation process

Question 8

Preferential creditors

Answer 8

This category primarily includes employees owed wages (max of £800) and holiday pay. It also covers certain pension contributions

Question 9

Secondary preferential creditors

Answer 9

As of Dec 1 2020, certain HMRC debts, such as VAT, PAYE and employee NICs are included in this category