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Section 529a & 530 - liquidation of companies

Jigna (Student - IPCC) (83 Points)

21 September 2011

Hi,

Please can anyone solve my basic doubts with relates to section 529A & 530 of the companies act, 1956 in case of liquidation of the companies. How we can segregate th epayment between overridding preferential creditors & secured creditors by using section 529A??????

Please help me on this....its so confusing!!!!!!!

REgards

Jigna

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Ateeq (CA - Final) (213 Points)
Replied 22 September 2011

As per Section 529A & 530 of the companies act.

Their are two types of creditors: -

1. Preferential creditors.

2. Overriding Preferential creditors.

Preferential creditors are those who has given secured loans to the company. (Refer section for further details).

Overriding Preferential creditors means the dues of company towards its employees towards bonus, PF, ESI or siimilar nature of payments.( Refer section for further details).

Hence as the names itself says, overriding preferential creditors will have the first charge on the assets of the company.