Singapore legislation
Section 203
Section 203
Priority of debts
(1)
Subject to the provisions of this Act, in a winding up there must be paid in priority to all other unsecured debts —
first, the costs and expenses of the winding up incurred by the Official Receiver as the liquidator of the company, including the costs, expenses and remuneration of any licensed insolvency practitioner appointed by the Official Receiver under section 134(f) to act as liquidator in the place of the Official Receiver;
second, any other costs and expenses of the winding up, including the remuneration of the liquidator (apart from any remuneration mentioned in paragraph (a)) and the costs of any audit carried out under section 192;
third, the costs of the applicant for the winding up order payable under section 127;
fourth, subject to subsection (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 any award or agreement regulating conditions of employment of any employee;
fifth, subject to subsection (2), the amount due to an employee as a retrenchment benefit or ex gratia payment under any contract of employment or any award or agreement that regulates conditions of employment, whether such amount becomes payable before, on or after the commencement of the winding up;
sixth, all amounts due in respect of work injury compensation under the Work Injury Compensation Act 2019 or the Work Injury Compensation Act (Cap. 354, 2009 Revised Edition) repealed by that Act accrued before, on or after the commencement of the winding up;
seventh, all amounts due in respect of contributions payable, during a period of 12 consecutive months commencing not earlier than 12 months before and ending not later than 12 months after the commencement of the winding up, by the company as the employer of any person, under any written law relating to employees’ superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act 1947;
eighth, subject to subsection (2), all remuneration payable to any employee in respect of vacation leave or, in the case of the employee’s death, to any other person in the employee’s right, accrued in respect of any period before, on or after the commencement of the winding up; and
ninth, the amount of all tax assessed, and all goods and services tax due, under any written law before the commencement of the winding up, and all tax assessed under any written law at any time before the time fixed for the proving of debts has expired.
(2)
The amount payable under subsection (1)(d), (e) and (h) must not exceed such amount as may be prescribed by the Minister by order in the Gazette.
(3)
In subsection (1)(d), (e), (g) and (h) and this subsection —
Definition
“employee” means an individual who has entered into or works under a contract of service with an employer, and includes a subcontractor of labour;
Definition
“ex gratia payment” means an amount payable to an employee on the winding up of a company or on the termination of the employee’s service by his or her employer on the ground of redundancy or by reason of any re‑organisation of the employer, profession, business, trade or work, and “an amount payable to an employee” for these purposes means an amount ascertained from any contract of employment, award or agreement;
Definition
“retrenchment benefit” means an amount payable to an employee on the winding up of a company or on the termination of the employee’s service by his or her employer on the ground of redundancy or by reason of any re‑organisation of the employer, profession, business, trade or work, and “an amount payable to an employee” for these purposes means an amount ascertained from any contract of employment, award or agreement, or if no amount is so ascertainable, such amount as is determined by the Commissioner for Labour or by an Employment Claims Tribunal constituted under section 4 of the State Courts Act 1970;
Definition
“wages or salary” includes —
all arrears of money due to a subcontractor of labour;
any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination, whether such amount becomes payable before, on or after the commencement of the winding up; and
any amount payable to an employee, on termination of the employee’s employment, as a gratuity under any contract of employment or any award or agreement that regulates the conditions of the employee’s employment, whether such amount becomes payable before, on or after the commencement of the winding up.
(4)
The debts in each class specified in subsection (1) rank in the order specified in that subsection, but as between debts of the same class rank equally between themselves, and must be paid in full, unless the property of the company is insufficient to meet them, in which case the debts of the same class abate in equal proportions between themselves.
(5)
Where any payment has been made to any employee of the company on account of wages, salary or vacation leave out of money advanced by a person for that purpose, the person by whom the money was advanced, in a winding up —
has a right of priority in respect of the money so advanced and paid, up to the amount by which the sum in respect of which the employee would have been entitled to priority in the winding up has been diminished by reason of the payment; and
has the same right of priority in respect of that amount as the employee would have had if the payment had not been made.
(6)
So far as the assets of the company available for payment of general creditors are insufficient to meet any preferential debts specified in subsection (1)(a), (b), (c), (d), (e), (g) and (h) and any amount payable in priority by virtue of subsection (5), those debts —
have priority over the claims of the holders of debentures under any floating charge created by the company (which charge, as created, was a floating charge); and
must be paid accordingly out of any property comprised in or subject to that charge.
(7)
Where the company is under a contract of insurance (entered into before the commencement of the winding up) insured against liability to third parties, then if any such liability is incurred by the company (whether before, on or after the commencement of the winding up) and an amount in respect of that liability is or has been received by the company or the liquidator from the insurer, the amount must, after deducting any expenses of or incidental to getting in such amount, be paid by the liquidator to the third party in respect of whom the liability was incurred, to the extent necessary to discharge that liability or any part of that liability remaining undischarged, in priority to all payments in respect of the debts mentioned in subsection (1).
(8)
If the liability of the insurer to the company is less than the liability of the company to the third party, nothing in subsection (7) limits the rights of the third party in respect of the balance.
(9)
Subsections (7) and (8) have effect despite any agreement to the contrary entered into after 29 December 1967.
(10)
Despite anything in subsection (1) —
paragraph (f) of that subsection does not apply in relation to the winding up of a company in any case where —
the company is being wound up voluntarily merely for the purpose of reconstruction or of amalgamation with another company, and the right to the compensation has on the reconstruction or amalgamation been preserved to the person entitled to that right; or
the company has entered into a contract with an insurer in respect of any liability under any law relating to work injury compensation; and
where a company has given security for the payment or repayment of any amount to which paragraph (i) of that subsection relates, that paragraph applies only in relation to the balance remaining due after deducting from that amount the net amount realised from such security.