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Who gets paid first: employees or creditors?

by on
in Human Resources

Q. My small construction business is closing its doors, and we have limited funds with which to pay employees and numerous creditors. What should we do? Who should we pay first?

A. You should strongly consider contacting a corporate or bankruptcy attorney to help you ensure an orderly wind-down and to minimize your risks. As a general rule of thumb, bankruptcy courts give higher priority to wage and tax claims than to claims by unsecured creditors.

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