Question

1.
Who are called preferential creditors?
(a) Debentures
(b) Share holders
(c) Bankers
(d) Taxes due to government​

Answer 1

Answer:

A) Debentures

Answer 2

Taxes due to government are the preferential creditors.

• A preferential creditor represent an entity who is given preferential status by retaining the right to initial amount during the liquidation due to insolvency.
• In such a case, a hierarchy set up by the Insolvency Act 1986.  
• For example - The employees. if a legitimate business goes bankrupt, it will be the first in line to amply compensate the typical workers of that business.
• Similarly, the government authorities, as when direct taxes are allegedly owed to a government, they are at the top of the list to get paid.