If a company is liquidated, proceeds from asset sales are most likely distributed to common shareholders:

In the context of a company's liquidation, the distribution of proceeds from asset sales adheres to a specific hierarchy of claims. This hierarchy dictates that secured debt investors are prioritized first, followed by preferred shareholders, and finally, common shareholders.

When a company liquidates, it sells its assets to raise funds. The proceeds from these sales are used to settle the company's debts and obligations in a particular order. First, secured creditors—those who have collateral backing their claims—are paid. Once all secured claims are satisfied, the next in line are the preferred shareholders, who hold a priority claim over common shareholders regarding asset distribution. Finally, if there are any remaining assets after paying off both secured creditors and preferred shareholders, those proceeds are then distributed to common shareholders.

Therefore, the statement that common shareholders receive their distribution after the claims of secured debt investors and preferred shareholders have been satisfied accurately reflects the legal and financial principles governing liquidation proceedings. This proper understanding of the liquidation process underscores the importance for investors of recognizing their place in the capital structure.