Describe briefly the priority of claims in a formal liquidation.
The main purpose due to which the companies are liquidated is to collect the assets, determining the outstanding claims against the company and then to satisfy the claims as per the law. This is the general process when the company becomes insolvent(Order of Priortity for Creditors, n.d.). The order in which the proceeds will be paid are: Liquidators cost: These are the cost which the organizations are incurring in process of liquidation. Fixed Charge Creditors: These are the set of creditors whom company owes some money but they have some rights over the securities of the company