Section 1: Priority of payments to preferential creditors

1. Priority of payments to preferential creditors (1) Costs of liquidator The Official Receiver or liquidator shall first pay, in the order of priority in which they are listed— (a) the fees and expenses properly incurred by the Official Receiver or liquidator in carrying out the duties and exercising the powers of the Official Receiver or liquidator and the remuneration of the Official Receiver or liquidator including the cost of an audit under section 179; (b) the fees and expenses and remuneration properly incurred by the trustee of a Proposal under section 79 or of the Official Receiver under a Summary Instalment Order under section 87 or an administrator under Sub-part I or Part III in relation to companies, in carrying out the duties and exercising the powers of the trustee, Official Receiver or administrator; (c) the reasonable costs of a person who applied to the Court for adjudication in the case of bankruptcy or an order in the case of a liquidation that the company be wound up, including the reasonable costs incurred between attorney and client in procuring the order, the quantum of such costs being determined in accordance with the rules of Court; (d) the actual out-of-pocket expenses necessarily incurred by a committee of inspection; (e) rent incurred by the Official Receiver or liquidator in relation to property of the debtor let or tenanted to the Official Receiver or liquidator during the period following adjudication or commencement of the winding up; (f) to any creditor who protects or preserves assets of the debtor for the benefit of the debtor’s creditors by the payment of money or the giving of an indemnity— (i) the amount received by the Official Receiver or liquidator by the realisation of those assets, up to the value of that creditor’s unsecured debt; and (ii) the amount of the costs incurred by that creditor in protecting or preserving those assets; I14 – 235 [Issue 7] Insolvency Act (g) costs incurred by the liquidator for essential services under section 136; (h) cost of brokers’ charges and commission on the sale and removal of charges (article 2108 of the Code Civil Mauricien). (1.1) (a) In the event of the winding up of an insurance company, distribution of the assets will be effected in accordance with section 63 of the Insurance Act. (b) In the event of the winding up of a private pension scheme, distribution of the assets will be effected in accordance with FSC Rules made under section 47 of the Private Pension Schemes Act. (2) Amounts due to Government and its Agencies After paying any claims referred to in subparagraph (1), the Official Receiver or liquidator must next pay, to the extent that it remains unpaid to the DirectorGeneral of the Mauritius Revenue Authority, Registrar-General or a local authority as the case may require, the amount of— (a) — (b) — (c) income tax, excluding any amount withheld pursuant to section 102, or deducted pursuant to section 111J, of the Income Tax Act; (d) registration duty payable under the Registration Duty Act; (e) duty payable under the Customs Act; (f) charges, dues or duties payable to the Director-General of the Mauritius Revenue Authority under any enactment; (g) charges, or dues payable to a local authority under any enactment, that is due and unpaid for a period not exceeding 4 years prior to the date of adjudication or the commencement of the winding up but limited in each case to the greatest amount due in respect of the period of any one tax or revenue y yable under the Registration Duty Act; (e) duty payable under the Customs Act; (f) charges, dues or duties payable to the Director-General of the Mauritius Revenue Authority under any enactment; (g) charges, or dues payable to a local authority under any enactment, that is due and unpaid for a period not exceeding 4 years prior to the date of adjudication or the commencement of the winding up but limited in each case to the greatest amount due in respect of the period of any one tax or revenue year over the said period of 4 years. Such claims shall be inscribed on a yearly basis failing which they will not qualify for payment. (3) Wages or salaries due to employees (a) After paying the claims referred to in subparagraph (2), the Official Receiver or liquidator must next pay, to the extent that they remain unpaid, the following claims— (i) subject to paragraph 3, all wages or salary of any employee of the debtor, whether or not earned wholly or in part by way of commission, and whether payable for time or for piece work, in respect of services provided to the debtor during the period of one month before the commencement of the adjudication or winding up; (ii) amounts that are preferential claims under sections 53 and 119 (5) (claim relating to lien over records or documents of debtor); (iii) all sums which by any other enactment are expressly required to be paid in accordance with the priority established by this section. (b) The maximum amount that may be paid to any one employee under subparagraph (a) (i) is 30,000 rupees or such other sum as may be prescribed. [Issue 7] I14 – 236 Revised Laws of Mauritius (4) Costs of compromise with creditors After payment of the claims referred to in subparagraph (3) the liquidator in the case of a liquidation must next pay the amount of any costs referred to in section 260 (c) of the Companies Act (costs of compromise by company with creditors). (5) Payments made pari passu with first ranking fixed and floating charges and mortgages (hypothèque conventionelle) inscribed for more than 3 years After payment of the claims referred to in subparagraph (4), the Official Receiver or liquidator shall next pay the amount payable under any first ranking fixed and floating charge or mortgage (hypotheque conventionelle) inscribed for more than 3 years (articles 2150-1 and 2202-5 of the Code Civil Mauricien), provided that— (a) any penalty interest or any other interest charge above the standard rate of interest payable under the agreement between debtor and creditor shall be deferred and paid along with unsecured creditors under section 331 of the Act; and (b) not more than 3 years’ interest calculated at this standard rate shall be payable under this level of priority pari passu with— (i) any compensation for unjustified dismissal that accrues or crystallises before completion of the winding up; and (ii) payment for termination of employment in accordance with the Employment Rights Act. (6) Rent: Landlord’s special privilege After payment of the claims referred to in subparagraph (5), the Official Receiver or liquidator shall next pay any rent unpaid to any landlord of the debtor due and unpaid for the period of 6 months preceding the date of adjudication or the commencement of the winding up (article 2150-2 of the Code Civil Mauricien). (7) First ranking, fixed and floating charges and mortgages (hypothèque conventionele) inscribed for less than 3 years (a) After payment of the claims referred to in subparag vilege After payment of the claims referred to in subparagraph (5), the Official Receiver or liquidator shall next pay any rent unpaid to any landlord of the debtor due and unpaid for the period of 6 months preceding the date of adjudication or the commencement of the winding up (article 2150-2 of the Code Civil Mauricien). (7) First ranking, fixed and floating charges and mortgages (hypothèque conventionele) inscribed for less than 3 years (a) After payment of the claims referred to in subparagraph (6), the Official Receiver or liquidator shall next pay the amount payable under any first ranking, fixed and floating charge or mortgage (hypothèque conventionele) inscribed for less than 3 years (article 2202-2255 of the Code Civil Mauricien), together with any interest not paid under the fifth priority referred to in subparagraph (5), provided that any penalty interest or other interest charge above the standard rate of interest payable under the agreement between debtor and creditor shall be deferred and paid along with unsecured creditors under section 311. (b) The amount payable under any inscribed charge or mortgage, other than a first ranking, fixed and floating charge or mortgage (hypotheque conventionele). (8) Claims of victims of an accident After payment of the claims referred to in subparagraph (7), the Official Receiver or liquidator shall next pay the amount established to be due to the victim of an accident or to his heirs or relative including any medical and funeral expenses and damages for temporary incapacity (articles 2148-8 and 2152 of the Code Civil Mauricien). (9) Other privileges, securities and creditors After payment of the claims referred to in subparagraph (8), the Official Receiver or liquidator shall next pay the following claims in the ranking and order I14 – 237 [Issue 7] Insolvency Act provided for in the Code Civil Mauricien and in accordance with section 331 of the Act— (a) the cost incurred by a creditor for the preservation of any movable of the debtor including the costs of storage and insurance (article 21504 of the Code Civil Mauricien); (b) other privileges including the unpaid vendor’s privilege or lien (article 2150-5 of the Code Civil Mauricien); (c) privileges for architects and builders. (10) Amounts due to Government and its Agencies in relation to amounts due and unpaid for over 3 months After payment of the claims referred to in subparagraph (9) the Official Receiver or liquidator shall next pay the amount of all other arrears due and unpaid in relation to the taxes, charges and dues referred to in subparagraph (3) above which are due and unpaid for the period not exceeding 4 years prior to the date of adjudication or the commencement of the winding up which has not been paid under the third priority in subparagraph (3) above (articles 2148-3 and 2152 of the Code Civil Mauricien). (11) All other unsecured creditors who have proved in the bankruptcy or winding up including claims for— (a) judicial costs and Court fees (articles 2148-2 and 2152 of the Code Civil Mauricien); (b) funeral expenses (article 2148-4 of the Code Civil Mauricien); (c) expenses of an individual debtor’s last illness (article 2148-5 of the Code Civil Mauricien); (d) necessities sold to the debtor and his family during the year before the date of adjudication or the commencement of the winding up (article 2148-7 of the Code Civil Mauricien). and Court fees (articles 2148-2 and 2152 of the Code Civil Mauricien); (b) funeral expenses (article 2148-4 of the Code Civil Mauricien); (c) expenses of an individual debtor’s last illness (article 2148-5 of the Code Civil Mauricien); (d) necessities sold to the debtor and his family during the year before the date of adjudication or the commencement of the winding up (article 2148-7 of the Code Civil Mauricien).