Question

(A)
Question:
Government dues that arose within 12 months before the date of winding up is treated as....​

Answer 1

Answer:

Workmen's dues (for 24 months) and secured creditor's dues, if the security has been relinquished. Employees dues other than workmen (for 12 months) Unsecured financial creditors. Government dues and unpaid dues to secured creditor, if the security has been realized.

Answer 2

Correct question:

Amount of Government dues that arose within 12 months before the date of winding up is treated as

a) Secured creditor

b) Over-riding preferential creditor

c) Preferential creditor

d) Unsecured creditor

Answer:

The amount of government dues that arose within 12 months of the winding up date is considered as Preferential creditor.

The correct answer is option (c)

If the debtor declares bankruptcy, a "preferential creditor" is an individual or organisation that has first priority in receiving payment.

The priority creditors are as follows: -

1. all revenues,
2. taxes,
3. cesses, and
4. rates

due to be paid by the company within 12 months of the start of the winding up process, whether payable to the government or a local authority.

The incorrect answer option (a)

A secured creditor is a creditor or lender who participates in the issuance of a credit product backed by collateral.

The incorrect answer option (b)

It specifies the debts that must be paid first before other obligations in the event of a company's liquidation. This clause of the Companies Act is extremely significant for a corporation in the process of being wound up, as it establishes the priority of debt payments.

The incorrect answer option (d)

An unsecured creditor is a person or company that lends money without requiring the borrower to put up any assets as collateral. This increases the creditor's risk because the creditor will have nothing to fall back on if the borrower defaults on the loan.