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
Jaedan Industries has the following account balances as of December 31, 2010.  The firm's dividend payout ratio is 25% and the tax rate is 34%.  The firm's stock price on December

Q. Explain the Auditing Standards? Auditing Standards - Guidelines to which an AUDITOR adheres. Auditing standards encompassauditor's professional qualities, as well as her or

what is recorded sales on account of 3,280

Q. What is Exposure Draft? Exposure Draft - Document issued by AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA), FINANCIAL ACCOUNTING STANDARDS BOARD (FASB), GOVERNME

Exceptions to the rule of lapse There is no lapse in either of the following cases: 1. Where the gift or disposition is made in discharge of a moral obligation recognised by t

an asset has a useful life of 4 years.If it is depriciated by diminishing balance method.Its book value at the end of 4 years is 24% of its original cost.Hence the rate of depricia

Craig's Cars has assets of $4,550 and stockholders' equity of $3,200. What is the amount of liabilities? What is the amount of claims?

Steps in preparing the consolidated balance sheet Step 1 : Prepare the 3 important accounts i.e. cost of control to determine goodwill Group retained profits Mino

if you inherited 45,000 today and invested all of it in a security that paid a 7 percent rate of return how much would you have in 25 years

Question : i) Show the interdependence of business strategy and Information Systems in an organization. ii) Distinguish using suitable examples between decision-support syst