Question

Q. In what priority Operational creditors get payment.can we file case against the company which is under liquidation process?

Answer 1

Following shall be waterfall for Operational Creditors:

Waterfall Mechanism” is the order of priority in which the proceeds from the sale of liquidation assets are distributed. As per Sec.53 of the IBC, the order of priority is as follows:

1. The insolvency resolution process cost and the liquidation costs paid in full.
2. The following debts which shall rank equally between and among the following:
   1. workmen’s dues for the period of twenty-four months preceding the liquidation commencement date; and
   2. debts owed to a secured creditor in the event such secured creditor has relinquished security in the manner set out in section 52;
3. wages and any unpaid dues owed to employees other than workmen for the period of twelve months preceding the liquidation commencement date;
4. financial debts owed to unsecured creditors;
5. the following dues shall rank equally between and among the following:—
   1. any amount due to the Central Government and the State Government including the amount to be received on account of the Consolidated Fund of India and the Consolidated Fund of a State, if any, in respect of the whole or any part of the period of two years preceding the liquidation commencement date;
   2. debts owed to a secured creditor for any amount unpaid following the enforcement of security interest;
6. any remaining debts and dues;
7. preference shareholders, if any and
8. Equity shareholders or the partners as the case may be

If a Company already in liquidation process the cant file IBC case against such company