In liquidation, landlord's claim gets preference.

Posted On Monday, 27 January 2003 02:00 Published by
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Concurrent claims are those not secured or preferent when tenants are placed into liquidation or sequestration.

Concurrent claims are those not secured or preferent when tenants are
placed into liquidation or sequestration.

Concurrent claims are paid out of the balance of the assets, once the
secured and preferent claims - as well as those of the liquidators -
have been paid. The liquidator is entitled to a fee for his/her work
and this is deducted before concurrent claims are paid.

Furthermore, if there are insufficient funds to pay the liquidator's
costs, the liquidator has the right to claim the fee from the
concurrent creditors in proportion to the quantum of their claims.

Take note of the following aspects:
nSubmitting a claim is different to proving a claim. Submission
advises the trustee of the types and amount of your various claims
against the estate; and To prove your claim is to complete a formally drafted schedule in accordance with a set of legislated criteria, including a power of
attorney which allows the trustee to represent the landlord before
the Master of the High Court.

Once the landlord has proved a claim, certain legal obligations arise
for the landlord and the trustee.

The most relevant of these is that:
The landlord's preferent claims must be paid prior to concurrent
claims; the landlord's concurrent claims are regarded as equal to the
other concurrent claims; and the trustee must consider all the claims
lawfully and fairly.

Where the liquidator has insufficient funds (from the sale of the
assets) to claim his/her fees, the liquidator may claim the fees from
the concurrent creditors (including the landlord). This would be in
proportion to their claims.

The danger for a landlord who has proved a concurrent claim is that
the landlord may be asked to contribute towards the liquidation costs.
Landlords (or their managing agents) must, therefore, ensure that
they do not prove a concurrent claim if there is a danger of
contribution).

Landlords should examine the other submitted claims prior to proving
their concurrent claims in order to avoid such contribution.
Various creditors' meetings and reports will be held and made during
the liquidation process.

(Information supplied by Jonathan Smith, director of Courtwell
Consulting, tel 011-888-5978.)


Publisher: The Star
Source: The Star

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