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Divya Jeswani

Divya Jeswani (Querist)
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01 December 2015 Who is paid first out of Secured Creditors n Workmen's dues in the case of winding up?? Plz guide

Anand Verma

Anand Verma (Expert)
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01 December 2015 Since the sections of the Companies Act 2013 related to winding up has not been notified yet, therefore the provisions of the Companies Act 1956 related with winding up proceedings are still operative.

As per Section 529A of the Companies Act 1956 the dues of Secured Creditors and Workmen's are considered as overriding preferential payments and shall be paid in priority to all other debts.

The section further state that The debts payable under clause (a) and clause (b) of sub-section (1) of Section 529A shall be paid in full, unless the assets are
insufficient to meet them, in which case they shall abate in equal proportions.

Therefore at the time of payment the dues of workmen's and secured creditors will rank pari passu.

Further, under the Companies Act 2013 the section 326 covers this aspect and also given preferential treatment to wages and salary over secured creditors.