Preferential debts-distribution of assets-liquidation, Financial Accounting

Preferential debts

These are almost the same as in bankruptcy; with the addition that any person who has advanced money for the payment of wages has the same priority as the person receiving payment out of the advance would otherwise have had s.311. The "relevant date" for calculating these debts is the date of the resolution to wind up, or the date of the winding-up order or of the appointment of a provisional liquidator. There are no pre-preferential debts in liquidation, and the only deferred debt is interest in excess of 6 per cent per annum.

The preferential debts in bankruptcy include the following:

  1. Local rates and amounts deducted as P.A.Y.E. from employees' pay accruing due during the twelve month preceding the commencement of the winding up;
  2. Up to one year's arrears of any other assessed taxes;
  3. Wages and salary due to employees (but not directors) for work done during the four months preceding the winding-up up to Shs 4,000 per employee;
  4. All government rents not more than one year in arrears;
  5. Employer’s National Social Security Fund due during the previous twelve months;
  6. Any amounts, which have accrued before the winding up due to employees is respect of any compensation under the Workmen's Compensation Act.
Posted Date: 12/13/2012 2:56:07 AM | Location : United States

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