Companies Act 2014 section 621

Preferential payments in a winding up

Section 621 sets out the categories of debts that must be paid ahead of all other creditors when a company is wound up, including certain taxes, employee wages, holiday pay, social welfare contributions, and pension obligations.

• Certain taxes and rates — including local rates, income tax (PAYE), VAT, and local property tax — that fell due within the 12 months before the relevant date must be paid as preferential debts ahead of all other creditors.
• Employee wages and salary (up to a maximum of €10,000 per claimant) for the four months before the relevant date, accrued holiday pay, sick pay scheme amounts, and superannuation contributions all rank as preferential debts.
• Employer social welfare contributions and uninsured workplace accident liabilities also receive preferential status, unless the winding up is solely for the purpose of reconstruction or amalgamation.
• All preferential debts rank equally among themselves and, if assets are insufficient to pay them in full, they abate in equal proportions; they also take priority over the claims of holders of floating charges.