275 Conditions to priority of payments to preferential creditors

(1)

The claims listed in each of subsections (2), (3), (4), and (5) of section 274

(a)

rank equally among themselves and, subject to any maximum payment level specified in any Act or regulations, must be paid in full, unless the property of the bankrupt is insufficient to meet them, in which case they abate in equal proportions; and

(b)

in so far as the property of the bankrupt available for payment of those claims is insufficient to meet them,—

(i)

have priority over the claims of any person under a security interest to the extent that the security interest—

(A)

is over all or any part of the bankrupt’s accounts receivable and inventory or all or any part of either of them; and

(B)

is not a purchase money security interest that has been perfected at the time specified in section 74 of the Personal Property Securities Act 1999; and

(C)

is not a security interest that has been perfected under the Personal Property Securities Act 1999 at the date of adjudication and that arises from the transfer of an account receivable for which new value is provided by the transferee for the acquisition of that account receivable (whether or not the transfer of the account receivable secures payment or performance of an obligation); and

(ii)

must be paid accordingly out of any accounts receivable or inventory subject to that security interest (or their proceeds).

(2)

For the purposes of subsection (1)(b), the terms account receivable, inventory, new value, proceeds, purchase money security interest, and security interest have the same meanings as in the Personal Property Securities Act 1999.

(3)

To the extent that the claims to which subsection (1) applies are paid out of property referred to in paragraph (b) of that subsection, the amount so paid is an unsecured debt due by the bankrupt to the secured party.

Compare: 1993 No 105 Schedule 7 cls 9, 10