A liquidator of a company is entitled to a remuneration at 2% on assets realised and 3% on amount distributed to Preferential Creditors and 3% on payment made to unsecured creditors. The assets were realised for ₹25,00,0

CS Executive · Company Accounts & Auditing Practices · PYQS · December 2017
A liquidator of a company is entitled to a remuneration at 2% on assets realised and 3% on amount distributed to Preferential Creditors and 3% on payment made to unsecured creditors. The assets were realised for ₹25,00,000 against which payment was made as follows: Liquidation Expenses ₹25,000, Secured Creditors ₹10,00,000, Preferential Creditors ₹75,000. The amount due to unsecured creditors was ₹15,00,000. You are asked to calculate the total remuneration payable to liquidator.

Answer & Explanation:

Calculation of Total Remuneration Payable to Liquidator 2% on assets realized of ₹25,00,000 = ₹50,000 3% on payment to preferential Creditors ₹75,000 = ₹2,250 3% on payment to unsecured creditors = ₹39,255 (Note 1) Total (i) + (ii) + (iii) = ₹50,000 + ₹2,250 + ₹39,255 = ₹91,505 Working notes 1: Cash available for unsecured creditors after all payments including liquidator's remuneration on assets realized and preferential creditors: = ₹25,00,000 - [₹25,000 (Liquidation Expenses) + ₹10,00,000 (Secured Creditors) + ₹75,000 (Preferential Creditors) + ₹50,000 (Remuneration on assets realized) + ₹2,250 (Remuneration on preferential creditors)] = ₹25,00,000 - ₹11,52,250 = ₹13,47,750 Liquidator's remuneration on payment to unsecured creditors = (3 / 103) * ₹13,47,750 = ₹39,255

Topics: Liquidation of Companies

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