From 28 September 2012 the maximum priority amount for employees in liquidations, receiverships and bankruptcies will increase from $18,700.00 to $20,340.00 per employee.
Liquidators, receivers and the Official Assignee in a personal bankruptcy must pay certain amounts to employees, in priority to ordinary unsecured creditors.
These preferential employee entitlements include:
- holiday pay
- redundancy compensation, and
- wages or salary for the four month period prior to the liquidation, receivership or bankruptcy.
However, the amount that any individual employee can receive under the preferential payment regime is capped by Schedule 7 of the Companies Act 1993, and section 276 of the Insolvency Act 2006. This cap (the “maximum priority amount”) is adjusted every three years, based on average pay rises.
The old $18,700 maximum priority amount will continue to apply to liquidations, receiverships and bankruptcies that commenced prior to 28 September 2012.