(1) In a winding-up of a company there shall be paid in priority to all other debts—
(a) all rates, charges, taxes, assessments or impositions, whether imposed or made by the Government or by any public authority under the provisions of any Act, and having become due and payable within 12 months next before the relevant date;
(b) all wages or salary (whether or not earned wholly or in part by way of commission or for time or piece work) of any employee, not being a director, in respect of services rendered to the company during 4 months next before the relevant date; or
(c) all severance benefits, not exceeding the equivalent of 45 days basic wages or salary, due or accruing to an employee, not being a director, whether retrenched by an employer, a receiver, a liquidator or some other person.
(2) Where any payment on account of wages, salary or severance benefits has been made to any employee of a company out of money advanced by some person for that purpose, that person shall in a winding-up have 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 that employee would have been entitled to priority in the winding-up has been diminished by reason of the payment having been made.
(3) The debts and claims to which priority is given by subsection (1) shall—
(a) rank equally among themselves and be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions; and
(b) so far as the assets of the company available for payment of general creditors are insufficient to meet them, have priority over the claims of holders of debentures under any floating charge created by the company, and paid accordingly out of any property comprised in or subject to that charge.
(4) Subject to the retention of such sums as are necessary for the costs and expenses of the winding-up, the debts and claims to which priority is given by subsection (1) shall be discharged so far as the assets are sufficient to meet them.
(5) In the event of a landlord or other person distraining or having distrained on any goods or effects of the company within 3 months next before the date of a winding-up order, the debts to which priority is given by subsection (1) shall be a first charge on the goods or effects so distrained on, or the proceeds of the sale thereof, but in respect of any money paid under any such charge, the landlord or other person shall have the same rights of priority as the person to whom the payment is made.
(6) In this section, “the relevant date” means—
(a) in the case of a company ordered to be wound up compulsorily which had not previously commenced to be wound up voluntarily, the date of the winding-up order; and
(b) in any other case, the date of the commencement of the winding-up.
Effect of Winding-Up on Antecedent and Other Transactions