Order of payments-bankruptcy and liquidation, Financial Accounting

Assignment Help:

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.


Related Discussions:- Order of payments-bankruptcy and liquidation

Calculate term of leverage liquidity and fluidity, STATEMENTS OF FINANCIAL ...

STATEMENTS OF FINANCIAL POSITION: as at 31 December 2011 Group                                 Note         2011                         2010        RM'

Record performance of the services, Robin Corporation accepted credit cards...

Robin Corporation accepted credit cards for $34,200 of services performed in October 2011.The credit card company charged a 3% service fee and paid Robin as soon as it received the

Current market cost of debt, The cost of debt must be based upon the curren...

The cost of debt must be based upon the current market cost of debt. Where different kinds of debt are used estimates of more than one debt cost may be necessary and these costs we

What is bequest, Q. What is Bequest? Bequest - A gift by will of person...

Q. What is Bequest? Bequest - A gift by will of personal property. If bequest is money to the extent it's paid out ofincome from property it is taxable to the recipient. Normal

Vegetable gowing, disscuss the applicability of a operating cycle in vegeta...

disscuss the applicability of a operating cycle in vegetable growing bussiness in uganda

#title. incomplete records, Assignments with the answer for tafe sa 4 editi...

Assignments with the answer for tafe sa 4 edition. Question 11, page 76 and question 39, page 89

The expected net present values, A company is considering investing some in...

A company is considering investing some independent proposals, The proposals with their expected net present values and standard deviations are given in the following table.

the rate of interest on the gold is too high or too low, Suppose you are ...

Suppose you are a financial manager of Yuen Cheong Manufacturng Company. Due to the rising demand of product X, Yuen Cheong Manufacturng Company decides to open a new production pl

Shorter discounting periods, Occasionally cash flows may have to be discoun...

Occasionally cash flows may have to be discounted more often than once a year semi- monthly, daily, annually or quarterly.  The outcome of this is as fold (i)  The number of per

Rules of intestacy-leaves several wives, Rules of intestacy:leaves several ...

Rules of intestacy:leaves several wives The intestate leaves several wives, married under any system of law which permits polygamy. His personal and household effects and the r

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd