How are the claims of limited partners treated in a liquidation scenario?

In a liquidation scenario, the claims of limited partners are subordinate to secured creditors. This means that when a business is liquidated, secured creditors have the first claim to the company's assets because their loans are backed by collateral. In contrast, limited partners, who typically invest in a partnership but do not take part in its management, stand behind these secured creditors in the hierarchy of claims.

The liquidation process prioritizes claims to ensure that those who have secured their loans against specific assets are compensated before others. Limited partners, as investors, are generally treated like equity holders, meaning they share in the residual assets of the business only after all debts have been settled. Hence, their claims are fulfilled after secured creditors, making option C the accurate reflection of their treatment during liquidation.