preferential debts

preferential debts

categories of debts listed in the Insolvency Act 1986 and having priority to any claims to principal or interest under a debenture.
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When a company is declared bankrupt, the courts will order that its assets are liquidated and its debts are paid off in accordance with the order of preferential debts as set out in Article 189 of the Bankruptcy Law.
The ADGM Insolvency Regulations set out the manner (order) of distributing assets as follows: (i) the expenses of the winding up process, (ii) any preferential debts and (iii) payments of all other debts which are unsecured or secured.
The main preferential debts, which rank equally between themselves, are:
(6.) Preferential debts (e.g., statutory amounts payable to employees) rank in priority to any charge created as a floating charge.
Debts that have a priority quality are known as preferential debts whereas those without this quality are known as ordinary debts.
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