What is the first step in asset distribution upon the dissolution of a corporation in Georgia?

The correct answer is that the first step in asset distribution upon the dissolution of a corporation in Georgia is paying off creditors. This process is rooted in the legal priority of obligations that must be satisfied before any assets can be distributed to the shareholders.

When a corporation dissolves, it must first settle all of its debts and obligations. This means that any outstanding debts to creditors must be addressed before any distribution of remaining assets can be made. Creditors have a legal claim to corporate assets, and ensuring that all debts are paid protects shareholders from potential liability for corporate debts.

Once the creditors have been paid off, any remaining assets can then be distributed to the shareholders according to their respective ownership interests. This systematic approach ensures that the interests of creditors are protected and that the dissolution process complies with relevant laws and regulations.

The other choices, while related to the dissolution process, occur after the creditors have been satisfied. Notifying the Secretary of State and preparing final tax returns are administrative steps that follow the resolution of any outstanding debts, making them secondary to the priority of creditor payments during the dissolution process.