Question

At the time of liquidation, debenture holders are paid-off _____ the shareholders are paid.

• A. Before
• B. After
• C. At the same time
• D. None of the above

Answer 1

The correct option is A Before

If the issuer were to liquidate, the holders of the debenture bonds have a claim on any assets not specifically pledged to secure other debt. If there are no pledged assets or no secured debt, then the debentures have the first claim on all of the company's assets along with all the other general creditors.