Section 328: Priority of payments for distribution of debtor’s assets

328. Priority of payments for distribution of debtor’s assets (1) The Official Receiver or a liquidator shall, subject to subsection (1A), pay, out of the money received by him by the realisation of the property of a debtor, the preferential claims set out in the Fourth Schedule to the extent and in the order of priority specified in that Schedule. (1A) (a) Any amount withheld pursuant to section 102, or deducted pursuant to section 111J, of the Income Tax Act or any amount of tax due and payable pursuant to section 42 of the Value Added Tax Act shall, to the extent that they remain unpaid to the Director-General of the Mauritius Revenue Authority, not form part of the property of the debtor under subsection (1). (b) The Official Receiver or a liquidator shall— (i) set aside, out of any money received by him on behalf of the debtor, any amount referred to in paragraph (a); and (ii) before payment of any preferential claim referred to in subsection (1), remit to the Director-General of the Mauritius Revenue Authority the amount set aside under subparagraph (i). (2) Subject to section 329, the priorities set out in the Fourth Schedule shall apply without inscription to the distribution in the case of an adjudication or winding up notwithstanding any provisions with regard to privilege and priority of claims in the Code Civil Mauricien and in section 141 of the Income Tax Act. (3) The Court may, on the application of the Official Receiver or a liquidator or any affected creditor, order the erasure of any inscription by the Conservator of Mortgages where it appears that the creditor who has taken the inscription is not entitled to priority over the chirograph creditors of the debtor. (4) After paying the preferential claims in accordance with subsection (1), the Official Receiver or the liquidator shall pay any remaining money to the general creditors in accordance with section 329. (5) After paying the general creditors in accordance with subsection (4), the Official Receiver or the liquidator shall pay any remaining money to the debtor in accordance with section 330. (6) In the case of a company in winding up, the liquidator, after paying the general creditors in accordance with subsection (4), shall distribute the company’s surplus assets— (a) in accordance with the provisions of the company’s constitution; or I14 – 177 [Issue 7] Insolvency Act (b) where the company’s constitution does not contain any provision for the distribution of surplus assets or the company does not have a constitution, to shareholders rateably. (7) Any money received by the Official Receiver or liquidator by the realisation of the property of the debtor that cannot be paid in accordance with subsections (1) to (6) shall be paid into the Insolvency Surplus Account. (8) A secured creditor, other than the holder of a gage shall— (a) pursuant to sections 29 (3) (b) and 154 (2), have power to take possession of, realise and otherwise deal with property over which the secured creditor has a charge; and (b) hold and retain from any property or proceeds of realisation of property sufficient funds, or value of property to discharge any prior claims specified in the Fourth Schedule, such funds or property to be held on trust under the Trusts Act or otherwise for the benefit of the Official Receiver or liquidator, and the secured creditor shall pay the amount of any such prior claims to the Official Receiver or liquidator. (9) For the avoidance of doubt, it is declared that editor has a charge; and (b) hold and retain from any property or proceeds of realisation of property sufficient funds, or value of property to discharge any prior claims specified in the Fourth Schedule, such funds or property to be held on trust under the Trusts Act or otherwise for the benefit of the Official Receiver or liquidator, and the secured creditor shall pay the amount of any such prior claims to the Official Receiver or liquidator. (9) For the avoidance of doubt, it is declared that except as expressly provided in this Act, nothing in Parts II to IV of this Act shall affect the power of the holder of a gage under the Code Civil Mauricien to realise or otherwise deal with his security outside of bankruptcy or winding up in the same manner as he would be entitled to realise and deal with it apart from Parts 2 to 4 of this Act. [S. 328 amended by s. 28 (d) of Act 9 of 2015 w.e.f. 14 May 2015.] Sub-Part VI – Payments to general Creditors and Debtor