In this blog Jonathan discusses company liquidation and what creditors get paid first.
When an insolvent company enters a formal liquidation procedure, an insolvency practitioner will assume the role of liquidator and take over the reins of the business. They will set out to raise funds through the sale of company assets for which the proceeds will be distributed to creditors in an orderly fashion, as prescribed by the Insolvency Act 1986. The legislative measure establishes an order of priority of payment of debts which essentially dictates which creditors get paid first when a company goes into liquidation.
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