A bank currently has collateral on all of my business' assets. If the bank starts liquidation procedures, does the accounts payable of my business get paid back first, or does the bank?
This is a legal question and there can be variances, but it depends on the lien positions. If you have pledged machinery to the bank as an example, and the bank has the first lien, they will sell that machinery and pay the debt owed them before they would pay your suppliers.
Suppliers may well have a superior lien on the materials you bought from them, but have not yet paid for, to manufacture sellable products. It all comes down to who has the superior lien.
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This is a legal question and there can be variances, but it depends on the lien positions. If you have pledged machinery to the bank as an example, and the bank has the first lien, they will sell that machinery and pay the debt owed them before they would pay your suppliers.
Suppliers may well have a superior lien on the materials you bought from them, but have not yet paid for, to manufacture sellable products. It all comes down to who has the superior lien.
