When assets belonging to a company are sold during corporate bankruptcy filings the money collected must be used to first pay the investors. This is because they are at a higher risk than the rest. Those who hold bonds get more consideration than those who are just stockholders.

The reason for this is that bonds stand for the company’s debts and the company has a prior agreement with the creditor that it will return the principal and pay the interest. The holders of stocks make profits when the company is performing well as they are the ones who own the company. It is the same thing when the company falls into financial crisis as they are the ones who take the greatest risk. If there are repayments to be issued they are the last to get compensated. If a company is unable to pay taxes obligatory company liquidation petition is issued. If granted the court then hires a liquidator.