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1) When a company goes into creditor’s voluntary winding up, who ultimately has the right to appoint the liquidator?
A. Ordinary shareholders
B. Preference shareholders
C. Creditors
D. DirectorsThe correct answer is A. Why? I thought the answer is directors have right to appoint the liquidator in voluntary winding up.
2) Which of the following ranks lowest in a liquidation?
A. Trade creditors
B. Fixed charge holder
C. Floating charge holder
D. Employee for unpaid wagesThe correct answer is A. Could someone explain to me why the answer is A and what if there are secured creditors and unsecured creditors, which one ranks lowest?
Thank you so much.
If you had posted this on the Ask ACCA Tutor page, you could have guaranteed that I would have seen it.
As it is, you were lucky that I happened to spot it!
The first question that you have posted? The answer must surely be option ‘C’ – in a creditors’ voluntary winding up, it’s the creditors that appoint the liquidator.
For the second question in your post, the answer is correct – it’s the trade creditors that rank at the lowest in that list. Even then, they rank above the preference share holders and they, in turn, rank higher than the equity (ordinary) share holders
What if there are secured creditors? The fixed charge holders and the floating charge holders are secured creditors and they rank higher than the unsecured trade creditors
OK?
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