ACCA LW · Chapter 11 · Question 4 of 10
In a compulsory winding up, which of the following is paid FIRST out of the proceeds of assets subject to a fixed charge?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) The fixed charge holder, after the costs of realising that asset
Explanation
Assets subject to a fixed charge are applied first to pay the costs of realising them and then the fixed charge holder. Liquidation expenses, preferential creditors, the prescribed part for unsecured creditors and floating charge holders are paid out of the remaining assets, including those subject to a floating charge. Unsecured creditors rank after all secured and preferential claims, and members are paid last.
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