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paying off debts in liquidation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › paying off debts in liquidation

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.
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    Posts
  • April 7, 2017 at 2:47 pm #380537
    Vipin
    Member
    • Topics: 151
    • Replies: 374
    • ☆☆☆☆

    The assests worth 156 million after all redundant costs and the liabialites is 280m and it is estimated that all liabilities would receive only 55.7c(156/280) per dollar owing to them.

    I have read that:
    Note the sequence of creditor priorities as followings:
    – taxes and unpaid wages
    – secured debts, including unpaid interest – fixed charge
    – secured debt – floating charge
    – unsecured creditors
    – preference shareholders including unpaid dividend
    – ordinary shareholders

    if they follow the sequence, first they should pay off secured debts and then unsecured debts. but if they give only 55.7c per dollar for all debts(both secured and unsecured inclusive). The calculation looks contradicting and hence I am confused.

    The case is taken from q.no1 of 2010 of dec 2010.

    April 7, 2017 at 5:36 pm #380550
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54721
    • ☆☆☆☆☆

    I am away from home until late Sunday night and so I do not have access to the question.

    Please ask again on Monday and I will answer you then (and please tell me the name of the question to help me find it)

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    Posts
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  • The topic ‘paying off debts in liquidation’ is closed to new replies.

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