Hypothetical accounting Q.

[ManDownUnder]

Company A is behind in paying wages. Let's say staff are owed $20,000 in wages at this point in time.

Company A is also doing something dodgy and avoiding tax.

The IRD and the Labour Dept both get on the case and nail the rotten little bastard to the wall... open up his accounts and find over half a Million in there...

Who get's priority access to the money? Wages get paid then IRD get what's left, or IRD first then wages if anything's left?

... purely hypothetical of course.

In terms of law. Chapter and Verse on this one please. I hypothetically need facts ... firm facts.

[Mrs Busa Pete]

IRD get there money first

[ManDownUnder]

IRD get there money first

OK - but why - i.e. what legislation says so? I really do need chapter and verse (hypothetically) on this one

[Grahameeboy]

It's not hypothetical is it MDU

[McJim]

Ask a qualified lawyer....check in the Cruiser section....

[MadDuck]

The Companys Act 1993 covers this. If the Official Assignee is able to collect any money then payment is in the following order:






Any money recovered by the Official Assignee during the course of the liquidation is paid out to creditors in the following priority order as specified by the Companies Act 1993:

Payment of the Official Assignee’s fees, expenses and remuneration;

Any costs awarded by the Court to the applicant creditor;

Any actual ‘out-of-pocket’ expenses of a liquidation committee (if a committee has been established);

Wages owed to employees for the four month period prior to the liquidation (note: there is a maximum preferential claim of $6,000 per employee);

Some taxes collected by the Inland Revenue Department, such as GST and PAYE; and

All other unsecured creditors.

[ManDownUnder]

The Companys Act 1993 covers this. If the Official Assignee is able to collect any money then payment is in the following order:

Cheers but that's if the Co is wound up (218) no? What if it's an ongoing concern?

[Stickchick]

Cheers but that's if the Co is wound up (218) no? What if it's an ongoing concern?

If the business is still trading then you can approach the Department of Labour to get a representative to get your money back

[ManDownUnder]

If the business is still trading then you can approach the Department of Labour to get a representative to get your money back

Ta... hypothetically of course...

[Stickchick]

Ta... hypothetically of course...

Of course hypothetically. if they are also in liquidation already then the Department of Labour will offer advice as to what can be done or talk to the appointed Liquidator.

[ManDownUnder]

Thanks all... gun is loaded - waiting for victim to walk back into the crosshairs... hypothetically... Justice is about to be served ... just after the hypothetical fallout is suitably controlled...

Mods - close the thread if you want/need.

GOD I love KB!

[Oscar]

Ask a qualified lawyer....check in the Cruiser section....

NOw that is funny...

[Winston001]

The priorities only operate in liquidation. If the business is continuing to trade then bills owing (including wages) are simply debts. In that case it is up to each person owed money to sue for the debt.

IRD is a special case - they have the power to dip into bank accounts.

This is certainly unjust when wages are owing and I think the Labour Department should be able to help.

What worries me is if the money is not in the Company A's account but instead is in a personal account of the (hypothetical) individual you refer to. In that case unpaid employees have to trace and prove he has ripped off the company - although it sounds like that might already be known.

There are some dishonest jerks out there. Pull that trigger with extreme prejudice.

[Storm]

There are some dishonest jerks out there. Pull that trigger with extreme prejudice.

But make sure you reload- you are planning on multiple wounds arent you?

[ManDownUnder]

Thanks all... gun is loaded - waiting for victim to walk back into the crosshairs... hypothetically... Justice is about to be served ...

GOD I love KB!

Ok - big thanks to those offering sage advice and less than perfectly sage contacts. I just came from a meeting with the IRD. Apparently they're not happy with some of the accounting practices, but it's ok - the staff are in line to get their wages after the investigation.