Where does a company’s wealth go if they go bankrupt?
In: 7
A bankrupt company’s wealth goes to its creditors (the people it owes money to). Roughly in order it goes to the following groups of people:
– (1) Paychecks to employees for work already performed
– (2) Repaying money borrowed from the bank
– (3) Paying bills like rent, electricity, Internet
– (4) Paying suppliers for goods and services that were delivered but not paid for
– (5) Repaying money borrowed from its customers
– (6) The shareholders of the company
Usually by the time you get to (6) the money has all gone to satisfy other groups’ claims. This can also vary somewhat depending on jurisdiction, the type of company, and the specifics of particular case.
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