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
Refer to Figure, using the Mason's gain formula, determine the transfer function of the system.

content of financial statement with refrence to indian company

CHARACTERISTICS OF PARTNERSHIP

1. Firm L has debt with a market value of $200,000 and a yield of 9%. The firm's equity has a market value of $300,000, its earnings are growing at a rate of 5%, and its tax rate i

For getting the EOQ formula we shall use the subsequent symbols: U = annual usage/demand Q = quantity ordered F = cost per order C = per cent carrying cost P  = pric

You will gain welfare from consuming bread and chocolate. Your welfare is described numerically by W = 4B + 2C, where B denotes the quantity of bread you choose to consume, and C d

When Lydia started her vending machine business, she instituted flexible budgeting for the first few months of operations. Her first monthly budget numbers were these: Cost of g

What points is necessary to meet users requirements To meet these users' requirements, it can be argued that accounting information must possess certain key qualities, or chara

Presented below are condensed financial statements adapted from those of two actual companies competing as the primary players in a specialty area of the food manufacturing and dis

Interstate Manufacturing produces brass fasteners and incurred the following costs for the year just ended: Materials and supplies used Brass