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
Given the following cash flows for projects A and B:   Year      Project A   Project B     0       -100,000     -150,000   (Project Cost)     1         25,000

April 2014 Notepayable $9,825,000 was issued. First due is April 1,2015. 6% interest erroneously expensed a full year''s interest

The following figures are taking from the book of Sheen Compnay limited as on december 31,2009 DEBIT SIDE : opening stock Rs 75000 purchases 245000 wages 30000 c

Generally Accepted Accounting Principles (GAAP) are guidelines for companies to follow as they prepare and issue financial statemnents. Let's start by getting an understanding of w

Q. Calculate infant mortality rate? Mid year population 440000 Late fatal death          29 No. of live birth           5200 No. of infant death      423 No. of mate

Q. Define about SME FINANCE? SMEs contribute in a significant way to many economies in the world. Moreover generating income, in often large proportions in relation to GNP acro

Carnival Cruise Lines This question has two parts. Answer both parts. Structure your response using headings and subheadings where appropriate. The use of tables and point fo

I am an AAT student studying lvl 3 AAT at college. I wish to learn how to complete self assessment end of year tax return forms for other people. That is because I have already bee

Explain the mechanism that states use to prevent the double taxation of the income of a corporation doing business in two or more states.

Ely purchased a patent (with a remaining legal life of ten years) from Backo on January 1, 2010 for $300,000. Ely expected to use the patent for five years. The carrying value on B