Company Asset Claims Overview
Lenders and third parties typically have the first claim on company assets. Limited liability companies, partnerships, and nonprofit corporations must obtain licenses and permits. Secured creditors have a registered charge against assets, categorized into fixed and floating charges. The priority of $2000 per employee under the WEPPA regime can impact secured creditors.
Asset Claim Hierarchy
Creditors’ claims on assets are referred to as liabilities. The accounting equation illustrates the distribution of business assets between creditors and owners. Common shareholders have a residual claim on assets, ranking lower than preferred stocks.
Distinction between Private and Public Companies
Privately-held companies are owned by founders, management, or private investors. Public companies offer a portion to the public through an initial public offering, granting shareholders a claim to assets and profits.
Legal Dispute Impact on Asset Claims
A victory by Lehman Brothers in a legal dispute regarding asset claims in a collateralized debt obligation may lead to downgrades in similar deals according to Fitch Ratings. Despite an English court ruling, a New York bankruptcy court allowed Lehman Brothers to pursue its claim on assets in the Dante CDO despite the bankruptcy filing.
You can quickly determine who holds a claim against a business’s assets by examining the company’s balance sheet.