What is Preferential Creditors?

Answer

(a)   The payment of Government dues for taxes provided they have arisen within 12 months before the date of liquidation.

(b)   The payment of wages and salaries to employees and workers (Not directors and officers) for a maximum period of 4 months. The salaries and wages should have arisen within 12 months before the date of liquidation. However, the amount payable to an individual should not exceed Rs.20, 000.

(c)    The payment of provident fund, gratuity, pension as per the provisions of relevant acts.

(d)   Any leave salary which is payable to the employees and workers.

(e)   Compensation paid as per the provision of the workmen compensation Act and Industrial Disputes Act.

(f)    Cost of investigation as per the provision of Sec. 235 or 237 of the Companies Act, 1956.

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