Question

Will all the creditors be paid in full at the conclusion of this planned liquidation

Answer 1

Only secured creditors will pe paid in full i.e. creditors who have a claim against a specific asset of the company. Secured creditors will be paid first as against unsecured creditors.

Next, Preferential creditors would be paid i.e. employees.

Next, secured cretitors with a floating charge would be paid i.e. creditors who have a charge against raw materials, work-in process, stock, furniture and fittings etc.

Unsecured creditors will be paid out of the balance left after payment to all the above mentioned creditors. If the company has sufficient cash or assets, unsercured creditors would get paid in full. Otherwise they will be paid to the extent of balance of cash or assets available with the company.

Hence, in case of planned liquidation all creditors would get paid in full but unsecured creditors may or may not get paid in full (as it is subject to availabilitiy of cash and assets).