221 Priority of payment by a receiver

Priority of payment by a receiver

If the receiver is appointed on behalf of debenture holders of debentures secured by a floating charge or if the debenture holder has taken possession of the floating, and at that material time the company is not in the course of being wound up, the following shall be paid out of any assets in the hands of the receiver in priority to any claim for principal or interest of in respect of the debentures (Section 191 CA).

The priority of debts is similar to Section 292(3) and Section 292(5):

1. cost and expenses of receivership;

2. all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating conditions of employment, of any employee not exceeding one thousand five hundred ringgit or such other amount as may be prescribed from time to time whether for time or piecework in respect of services rendered by him to the company within a period of four months before the
appointment of receiver or possession taken of the floating charge (as case may be).

3. all amounts due in respect of worker’s compensation under any written law relating to worker’s compensation accrued before the appointment of receiver or possession taken of the floating charge;

4. all remuneration payable to any employee in respect of vacation leave, or in the case of his death to any other person in his right, accrued in respect of any period before the appointment of a receiver or possession taken of the floating charge;

5. all amounts due in respect of contributions payable during the twelve months before the appointment of receiver or possession taken of the floating charge as the employer of any person under any written law relating to employees superannuation or provident funds or under any scheme of superannuation or retirement benefit which is an approved scheme under the federal law relating to income tax; and

6. the amount of all federal tax assessed under any written law before the date of the appointment of receiver or possession taken of the floating charge or amount assessed at any time before the time fixed for the proving of debts has expired.

The above is to be paid in priority to claims by debenture holder secured by a floating charge.

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