What ranks first in order of priority during the liquidation of a company?

In the event of a company's liquidation, the order of priority for the distribution of its assets is critical. Fixed charges rank first in this hierarchy because they represent secured loans, where lenders have specific collateral that is pledged against the loan. This security gives fixed charge holders a superior claim on the company's assets compared to other creditors.

When a company goes into liquidation, the process involves paying off debts in accordance with their priority. Fixed charge holders are entitled to be paid from the proceeds generated by the assets they secured before any other creditors, including floating charge holders and unsecured creditors. This priority ensures that those who provided capital secured against specific assets have a better chance of recovering their investments.

Unsecured creditor payments typically come after fixed charge and floating charge holders because they have no collateral backing their loans. Shareholder distributions rank last, as they do not have a claim on the company’s assets until all debts have been settled. Thus, understanding this order of priority is crucial for those engaging with company finance and liquidation processes.