In general, in bankruptcy or "winding up" the unpaid salaries of employees come first, then creditors, and shareholders last. In spite of this general principle, I am sure many of us know of cases where employees worked for months without pay, and vendors or even investors got paid first, from the last dot-com bust.
The post uses the phrase "And paid everyone full compensation plus some extra benefits (like health insurance)" which I interpreted to simply mean that the employees correctly got their salaries and at least some of their benefits (they should receive all salary and benefits before investors get anything), which is often (illegally) not the case.
I googled the case you cited, but it doesn't seem to apply to back pay, but instead applies to the proceeds of a winding up being given to laid-off employees as a "bonus" instead of to the shareholders.
In startups, the issue is often complecated, because the same people are often employees, investors, and company officers, and I think the courts have some sense that anyone working for a startup knew it was risky, and treat those people differently from an employee at a big, well-established corporation.
The post uses the phrase "And paid everyone full compensation plus some extra benefits (like health insurance)" which I interpreted to simply mean that the employees correctly got their salaries and at least some of their benefits (they should receive all salary and benefits before investors get anything), which is often (illegally) not the case.
I googled the case you cited, but it doesn't seem to apply to back pay, but instead applies to the proceeds of a winding up being given to laid-off employees as a "bonus" instead of to the shareholders.
In startups, the issue is often complecated, because the same people are often employees, investors, and company officers, and I think the courts have some sense that anyone working for a startup knew it was risky, and treat those people differently from an employee at a big, well-established corporation.