The liquidator after realizing the assets of the company should distribute the proceeds among below mentioned claimants in the following order:

(A) Legal charges

(B) Liquidators remuneration and cost of expenses of winding up

(C) Workman's dues and claims of the secured creditors

(D) Preferential creditors and creditors secured by floating charge

(E) Unsecured creditors

Choose the correct answer from the options given below:

The correct answer is (A), (B), (C), (D), (E)

Key Points Liquidation of Company

• Liquidation is the process through which a debt-ridden firm shuts down operations and sells its assets to pay off its debts and other commitments.
• A corporation is liquidated when it is determined that it is unable to continue operating.
• This could be owing to a variety of factors, including insolvency (which is usually the primary reason), unwillingness to continue operations, and so on.
• When a business goes bankrupt, the liquidator sells the company's assets to pay off all debts.
• After repaying the creditors, the remaining positive balance is transferred to the company's shareholders.
• When there is liquidation of a company, one or more persons are required to be appointed specially for conducting the liquidation or winding up proceedings of the company. Such a person’s are called Liquidator’s. He is required to realise the assets, discharge the liabilities and distribute the surplus, if any among shareholders. 

Important Points The liquidator after realizing the assets of the company should distribute the proceeds among below-mentioned claimants in the following order:

•  Legal charges - The insolvency resolution process costs and the liquidation costs paid in full
•  Liquidators remuneration and cost of expenses of winding up
•  Workman's dues and claims of the secured creditors - Wages and any unpaid dues owed to employees other than workmen for the period of twelve months preceding the liquidation commencement date.
•  Preferential creditors and creditors secured by floating charge -  debts owed to a secured creditor in the event such secured creditor has relinquished security in the manner set out in section 52 of Insolvency Code, 2016.
•  Unsecured creditors - Then the Financial debts owed to unsecured creditors are settled
• Any remaining debts and dues.
• Preference shareholders, if any, and
• Equity shareholders or partners, as the case may be.