Creditors in Liquidations
Q: What is a Preferent creditor?
A: A preferent creditor is a creditor who holds security for his loans for example the creditor who has granted you a loan on your house or a hire purchase on your motor vehicle are examples of secured creditors. Apart from these creditors certain statutory creditors are preferent for example the taxman, employees, television licenses, costs owing to your doctor on your deathbed etc. The list is rather long and we will advise you on this.
Q: What does the term “concurrent creditors” mean?
A: Concurrent creditors are those creditors who do not hold any security for the money you owe them. In practical and legal terms they stand at the very end of the cue when it comes to the hope or possibility of receiving anything from your Insolvent estate.
Q What does “contribution” mean?
A: In the winding-up of your company’s estate it might happen that, even though preferent creditors receive a dividend, there are not enough funds to cover the administrative costs of the insolvent estate. You must keep in mind that preferent creditors are only obliged to pay the cost of realisation of the asset of which they hold security. They are not obliged to pay the “general administrative cost”. Should there be a shortfall in the “general administrative cost” then each creditor who has proven a claim in your insolvent estate becomes liable for the administrative cost, pro rata to the amount of his claim.