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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › paying off debts in liquidation
The assests worth 156 million after all redundant costs and the liabialites is 280m and it is estimated that all liabilities would receive only 55.7c(156/280) per dollar owing to them.
I have read that:
Note the sequence of creditor priorities as followings:
– taxes and unpaid wages
– secured debts, including unpaid interest – fixed charge
– secured debt – floating charge
– unsecured creditors
– preference shareholders including unpaid dividend
– ordinary shareholders
if they follow the sequence, first they should pay off secured debts and then unsecured debts. but if they give only 55.7c per dollar for all debts(both secured and unsecured inclusive). The calculation looks contradicting and hence I am confused.
The case is taken from q.no1 of 2010 of dec 2010.
I am away from home until late Sunday night and so I do not have access to the question.
Please ask again on Monday and I will answer you then (and please tell me the name of the question to help me find it)