Order of payments-bankruptcy and liquidation, Financial Accounting

ORDER OF PAYMENTS

The bankrupt’s estate must be distributed in the following order.

1. Cost and charges:
Costs and charges properly incurred in administering the estate must be paid in priority to all debts and in the proper sequence.

2. Pre preferential debts:
These are:

  • Proper funeral and testamentary expenses of a deceased insolvent;
  • Premiums paid by apprentices or articled clerks;
  • Property of a friendly society of which the bankrupt is an officer; and
  • Expenses properly incurred by a trustee of a deed of arrangement.

 

3. Preferential debts:
These include:

  • Local rates and amounts deducted as P.A.Y.E by a bankrupt employer from employees' pay accruing due during the twelve months preceding the receiving order;
  • Up to one year's arrears of any other assessed taxes;

 

4. Unsecured debts:
These rank equally after payment of preferential debts in full.

5. Deferred debts:
These include:

  • Accrued interest in excess of 6% per annum, due to an unsecured creditor;(paid in priority to other deferred creditors).
  • Statutory interest at 6% per annum; and
  • Claims arising under a settlement set aside by the trustee.

 

6. Surplus
Any surplus remaining after payment of all debts and other liabilities in full must be returned to the bankrupt.

Posted Date: 12/13/2012 1:18:22 AM | Location : United States







Related Discussions:- Order of payments-bankruptcy and liquidation, Assignment Help, Ask Question on Order of payments-bankruptcy and liquidation, Get Answer, Expert's Help, Order of payments-bankruptcy and liquidation Discussions

Write discussion on Order of payments-bankruptcy and liquidation
Your posts are moderated
Related Questions
5.    A stockholder named Sue must cast a vote for chair of the board. Sue prefers Mr. Lee to Ms. Doe, Ms. Doe to Mr. James, and Mr. James to Mr. Lee. a. Are Sue's preferences c

Q. What is fair value in stock market? Fair value - Amount at which an asset (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between

Q. Example on investment appraisal method ? Contribution per unit = 3·00 - 1·65 = $1·35 per unit Total annual contribution = 20000 × 1·35 = $27000 per year Annual cash fl


We consider two identical firms that produce the same good. The demand for that good is the function D(p) = 1 - p where p is the unit price. Firms incur no cost. The competition

PROTECTIVE TRUSTS The income of property may be settled on such terms as to restrict its availability to creditors of the beneficiary in the following ways: (a) Determinable

assets&what are the different type of asset

Following are Nintendo's revenue and expense accounts for a recent calendar year. Net sales ¥2,008,622 Cost of sales 1,864,981 Advertising expense 118,908 Other expense, net 397

Combined income statement The figures to appear in the combined income statement are based on the following diagram: 1) An arrow pointing into a box refers to purchase

You were recently hired by E&T Boats, Inc. to assist the company with its financial planning and to evaluate the company's performance.  E&T Boats, Inc. builds and sells boats to o