What is one key consideration when managing an insolvent estate?

When managing an insolvent estate, prioritizing debts according to legal standards is crucial. This approach ensures that the estate's limited assets are allocated in a manner that adheres to the established hierarchy of claims. Different classes of creditors—such as secured, unsecured, and priority creditors—have specific rights under the law. For instance, secured creditors are generally paid first because their claims are backed by collateral, while unsecured creditors may receive payment only after secured claims have been satisfied, and they may not receive the full amount owed, or any payment at all, in an insolvent estate.

Following these legal standards helps to maintain fairness and ensure compliance with statutory obligations, ultimately facilitating the orderly administration of the estate and reducing the risk of legal disputes among creditors. This legal framework is designed to uphold the rights of creditors and ensure that the process of settling the estate is conducted systematically and transparently.