Section 57: Order of settlement of liabilities

1) While settling the liabilities of a company which is being liquidated under this Act, the liquidator shall make payment of liabilities from the available funds according to the following order of priority:

(a) All expenses associated with the functions discharged by the interim administrator appointed pursuant to sub-section (4) of Section 11 and remuneration,

(b) Other amounts to be settled pursuant to Chapter 2,

(c) All expenses associated with the functions discharged by the inquiry officer appointed pursuant to sub-sections (3) and (4) of Section 10 and remuneration,

(d) All expenses associated with the functions discharged by the restructuring manager appointed pursuant to sub-section (2) of Section 22 and remuneration,

(e) All debts of the company borrowed during the period of investigation of the insolvency proceedings,

(f) All debts of the company borrowed during the period of the restructuring program of the company,

(g) All expenses associated with the functions discharged by the liquidator appointed pursuant to sub-section (1) of Section 37 and remuneration,

(h) Wages and remuneration due and payable to the workers or employees of the company at the time of the issue of the order under this Act to liquidate or restructure the company,

 Provided that no director of the company shall be entitled to such amount.

(i) Amounts payable to the workers or employees of the company in consideration of home leave, sick leave, gratuity and employee provident fund, if any, at the time of the issue of the order under this Act to liquidate or restructure the company,

Provided that no director of the company shall be entitled to such amount.

(j) All other amounts in consideration of debt claims accepted by the liquidator.

2) Every liability falling in the order of priority referred to in sub-section (1) shall be treated equally, and all liabilities falling in such order shall be settled fully.

Provided that if such liabilities cannot be settled fully, they shall be settled proportionately.

3) Where any liability of the company is insured, the amount receivable under such insurance contract shall be paid to that person who is entitled to it.

4) Where the liabilities mentioned in sub-section (1), (2), or (3) are settled fully, the surplus shall be used by the liquidator to pay interest payable on debts from the date of the order issued to liquidate or restructure the company to the date of acceptance of the debt claim. The amount remaining after such payment shall be distributed among the preference shareholders, and the remaining amount shall be distributed among the other shareholders proportionately.