Investors And Outstanding Debts.

[joko]

If a company is planning to pay off outstanding debts and investors, with what they can bring in - who comes first?

i was under the impression that investors take the risk of knowing that may not get it back?

i would have assumed that the actual debts owed come before paying back investors, right?

or am i totally wrong?

thanks

[Buenchico]

If you're referring to a limited company, where the directors wish to voluntarily liquidate it, they're obliged to appoint an authorised insolvency practitioner (even if the company is solvent) to act as the liquidator, and it's that liquidator who sorts out where the assets go to.

However the liquidator is obliged to act in the interests of the company's creditors, rather than those of the directors. (Prior to the appointment of a liquidator the directors would have been obliged to put the interests of shareholders first).

If an investor has put money into the company by way of a loan then the repayment of that loan will rank alongside the repayment of other debts. If he has invested in the company through buying shares then the company's creditors will take priority.

[Peter Pedant]

oof the top of my pretty head

it is governed by the Companies act
and goes in a certain order

secured creditors
debenture holders
unsecured creditors

share losses are never compensated
they just sort of lose their money

from your other postings
you are an unsecured creditor
and will get diddly squat....

The order is prescribed by law and the liquidators are NOT allowed to say - "the debenture holders are really pretty and in need of the moolah so I will do them first this time - the ones I did last week were AWFUL so I made them wait ...".