Where does a company’s wealth go if they go bankrupt?
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The process is quite similar to splitting up someone’s estate once they die. So in the same way the mortgage company gets paid off first (secured creditor), then it you have loans the bank can get repaid from cash assets. Anything remaining goes to the beneficiaries.
Company wind up is similar. An administrator/liquidator is appointed. The administrator will liquidate whatever assets (cash, property, equipment) there are and distribute them in terms of priority. The priority order can get quite complicated but it’s basically: 1. administrator, 2. suppliers/employees/tax (priority debt) 3. secured creditors, 4. unsecured creditors 5. Preferential shareholders 6. Regular shareholders. The owners/shareholders only get paid if there is anything left after everyone else is paid off and same goes up the chain. Generally companies who are bankrupt have more debts than assets so people can easily end up with nothing.
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