Rescue, Rehabilitation and Insolvency (Corporate and Personal) Act 2026 · As enacted · Part XII
344. Preferential claims
Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.
Official translationFrom Department of Government Printing, unchanged
A liquidator shall apply the proceeds of realisation of property of the company in or towards satisfaction of the claims, determined as at the relevant date, set out in the
Fourth Schedule to the extent and in the order of priority specified in that Schedule.
Without prejudice to paragraph 9 of the Fourth
Schedule “property of the company” in subsection (1) shall not include property subject to an encumbrance unless paragraph (a), (b), (c), (d) or (e) of subsection (1) of section 333 applies.
After paying claims in accordance with subsection (1), the liquidator shall apply the proceeds of realisation of property of the company in or towards the satisfaction of general claims, determined as at the relevant date, paying all general claims at the same time.
The claims referred to in subsection (3) rank equally among themselves and shall be satisfied in full unless the proceeds of realisation of property of the company are insufficient to satisfy them, in which case the proceeds shall abate rateably among all such claims.
After paying claims in accordance with subsection (3), interest as from the relevant date calculated in such manner as may be prescribed shall be paid on the claims referred to in subsections (1) and (3).
The claims referred to in subsection (5) rank equally among themselves with respect to the interest referred to in that subsection, and such interest shall be paid in full unless the proceeds of realisation of property of the company are insufficient to pay it, in which case the proceeds shall abate rateably among all of the claims referred to in that subsection with respect to that interest.
After paying claims in accordance with subsection (5), the liquidator –
Rescue, Rehabilitation and Insolvency
subject to paragraph (b), shall apply the surplus proceeds of realisation of the property of the company in accordance with subsection (8);
may distribute surplus unrealised property of the company in accordance with subsection (8)
instead of realising that property and applying the proceeds under paragraph (a) where the articles of the company permit its distribution; or
both of the following are first obtained –
a decision of the shareholders, by special resolution, that the property should be distributed; and
permission of the court, on the application of the liquidator, for the distribution of the property.
Any application of surplus proceeds or distribution of surplus property under subsection (7) is to be –
in the order of priority provided for in the articles of the company; or
in the absence of such provision, to the shareholders rateably.
Where, before the commencement of a liquidation, a creditor has agreed to accept a lower priority in respect of a debt than that which it would otherwise have accepted under this section, nothing in this section shall prevent the agreement from having effect according to its terms.
D - DUTIES TO REPORT
Part XIII
Part XIV