Originally Posted by
unionslave
But management will probably ensure they get paid !!!
I think that comment is unfair and untrue.
The order in which the liquidator will pay out is as follows:
- liquidators fees
- discharge loans secured on assets
- preferential creditors (Employees, Revenue Commissioners)
- ordinary creditors and unsecured loans
- shareholders
If the company has been placed into liquidation then all employees (management or otherwise) are treated as preferential creditors. There is no distinction between "management employees" and "other employees" unless they are Directors - in which case they have specific responsibilities not to trade recklessly or whilst the company is insolvent. The Directors of the company have specific duties under company law and the liquidator will have to report if he is of the opinion that these have not been carried out.
In many liquidations the funds run out after the liquidator and secured loans have been paid. Where funds remain it is likely that a percentage will be paid. Ordinary creditors and shareholders often see little in a liquidation.
Also as an aside - a Liquidator is appointed to wind up the company - an Administrator is appointed (with the support of creditors and banks) where it is likely the company can be restructured and continue to trade.