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      Question

      Under the Insolvency and Bankruptcy Code, 2016, which of

      the following is NOT a priority in the order of payment to creditors during the Corporate Insolvency Resolution Process (CIRP) ?
      A Insolvency resolution process costs and fees Correct Answer Incorrect Answer
      B Secured creditors Correct Answer Incorrect Answer
      C Operational creditors, including employees Correct Answer Incorrect Answer
      D Unsecured creditors Correct Answer Incorrect Answer
      E Preference shareholders Correct Answer Incorrect Answer

      Solution

      The order of priority during the distribution of assets in the event of liquidation under IBC is as follows:

      1. Insolvency Resolution Process Costs (highest priority)
      2. Secured creditors , including their dues (after they are paid, if there are any remaining funds)
      3. Operational creditors , including employees and workmen (such as wages, unpaid dues)
      4. Unsecured creditors (such as suppliers and bondholders)
      5. Equity shareholders (last in line for payment)
      • Preference shareholders are not prioritized in the liquidation process under the IBC, as they rank after creditors but before equity shareholders .

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