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Sunday, 12 January 2014 04:38

Who gets paid first in a liquidation?

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This is a slightly complicated area, but the broad outline is as follows.

After the costs of liquidation, secured creditors and preferential creditors are paid first, and then unsecured creditors.  Creditors with valid specific security over stock and equipment (such as retention of title clauses or leases) generally have priority to recover those items where they can be clearly identified.  The main categories of preferential claim are employees for wages, redundancy pay and holiday pay (up to a maximum of $22,160 per employee), and the IRD for GST and PAYE.

If there is say $50,000 remaining to pay to unsecured creditors and they are owed a total of $500,000, they will each receive a dividend of 10c in the $ on their debt.

Read 4467 times Last modified on Thursday, 24 November 2016 09:24

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