Commonwealth Numbered Acts

CORPORATIONS ACT 1989 No. 109 of 1989 - SECT 556

556. (1) Subject to the following provisions of this Division, in the winding
up of a company the following debts shall be paid in priority to all other
unsecured debts:

   (a)  first, the costs, charges and expenses of the winding up, including
        the taxed costs of an applicant payable under section 466, the
        remuneration of the liquidator and the costs of any audit carried out
        under section 539;

   (b)  if the winding up was preceded by the appointment of a provisional
        liquidator-next, the costs, charges and expenses properly and
        reasonably incurred by the provisional liquidator during the period of
        his or her appointment and the remuneration of the provisional
        liquidator;

   (c)  where the winding up commences within 2 months after the end of a
        period of official management of the company-next, the costs, charges
        and expenses of and incidental to the official management properly and
        reasonably incurred by the official manager during the period of
        official management, including the remuneration of the official
        manager, of any deputy official manager and of any auditor appointed
        in accordance with Part 3.7;

   (d)  where the winding up commences within 2 months after the end of a
        period of official management of the company-next, debts of the
        company properly and reasonably incurred by the official manager in
        the conduct by him or her of the business of the company during the
        period of official management;

   (e)  next, wages in respect of services rendered to the company by
        employees before the relevant date, but not exceeding $2,000 in
        respect of an excluded employee of the company;

   (f)  next, all amounts due in respect of injury compensation, being
        compensation the liability for which arose before the relevant date;

   (g)  next, all amounts due:

        (i)    on or before the relevant date;

        (ii)   by virtue of an industrial instrument;

        (iii)  to, or in respect of, employees of the company; and

        (iv)   in respect of leave of absence;
but not exceeding $1,500 in respect of an excluded employee of the company;

   (h)  next, retrenchment payments payable to employees of the company (other
        than excluded employees of the company);

   (j)  next, any amount that, pursuant to an order under section 91 of the
        Commission Act, the company was at the relevant date under an
        obligation to pay.

(2) In this section:

"company" means a company that is being wound up;

"employee", in relation to a company, means a person:

   (a)  who has been or is an employee of the company, whether remunerated by
        salary, wages, commission or otherwise; and

   (b)  whose employment by the company commenced before the relevant date;

"excluded employee", in relation to a company, means:

   (a)  an employee of the company who has been:

        (i)    at any time during the period of 12 months ending on the
               relevant date; or

        (ii)   at any time since the relevant date;
or who is, a director of the company;

   (b)  an employee of the company who has been:

        (i)    at any time during the period of 12 months ending on the
               relevant date; or

        (ii)   at any time since the relevant date;
or who is, the spouse of an employee of the kind referred to in paragraph (a);
or

   (c)  an employee of the company who is a relative (other than a spouse) of
        an employee of the kind referred to in paragraph (a);

"retrenchment payment", in relation to an employee of a company, means an
amount payable by the company to the employee, by virtue of an industrial
instrument, in respect of the termination of the employee's employment by the
company, whether the amount becomes payable before, on or after the relevant
date.