Section 392. Payments of certain debts subject to floating charge in priority to claims under charge

(1) If a receiver or receiver and manager is appointed on behalf of the holders of any debentures of a company secured by a floating charge or possession is taken by or on behalf of debenture holders of any property comprised in or subject to floating charge, then if the company is not wound up at the time, there shall be paid out of the assets coming into the hands of receiver or receiver and manager or other person taking possession in priority to the debenture holders the following:

(a) firstly, the costs, expenses and remuneration of the receiver or receiver and manager and any indemnity to which the receiver or receiver and manager is entitled to from or out of the property of the company;

(b) secondly, all wages or salaries, including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating conditions of employment, whether or not earned wholly or in part by way of commission, of any employee in respect of services rendered by him to the company for a period of four months before the date of the appointment of the receiver or receiver and manager up to an amount not exceeding fifteen thousand ringgit;

(c) thirdly, all remuneration payable to any employee in respect of vacation leave, or in the case of the employee’s death to any other person in his right, accrued in respect of any period before the date of the appointment of the receiver or receiver and manager; and

(d) fourthly, all amounts due in respect of contributions payable, including employee’s portion which has been deducted but not paid, during the next twelve months before the date of the appointment of the receiver or receiver and manager, by the company as the employer of any person under any written law relating to employees social security contribution and superannuation or provident funds or under any scheme of superannuation or retirement benefit which is an approved scheme under the federal law relating to income tax.

(2) The debts in each class specified in subsection (1) shall rank in the order but as between debts of the same class shall rank pari passu between the debts, and shall be paid in full, unless the property of the company is insufficient to meet the debts, in which case the debts shall diminish in equal proportions.

(3) If any payment has been made to any employee of the company on account of wages, salary or vacation leave out of money advanced by a person for that purpose, the person by whom the money was advanced shall, in a receivership, have a right of priority in respect of the money advanced and paid, up to the amount by which the sum in respect of which the employee would have been entitled to priority in the receivership has been diminished by reason of the payment, and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made.

(4) If the company is under a contract of insurance, entered into before the date of appointment of the receiver or receiver and manager, insured against liability to third parties, then if any such liability is incurred by the company, either before or after the date of appointment of the receiver or receiver and manager, and an amount in respect of that liability is or has been received by the company or the receiver or receiver and manager from the insurer, the amount shall, after deducting any expenses of or incidental to getting in the amount, be paid by the receiver or receiver and manager to the third party in respect of whom the liability was incurred to the extent necessary to discharge that liability or any part of that liability remaining undischarged in priority to all payments in respect of the debts referred to in subsection (1).

(5) Any payment made under this section shall be recovered as far as may be out of the assets of the company available for payment of general creditors.

(6) If a request is made by or with the concurrence of the receiver or receiver and manager for the giving of any of the supplies including water, electricity, gas and telecommunications, after the appointment of the receiver or receiver and manager, the supplier may make it a condition of the giving of the supply that the receiver or receiver and manager personally guarantees the payment of any charges in respect of the supply given after his appointment.

(7) Notwithstanding subsection (6), the supplier shall not make it a condition of the giving of the supply, or do anything which has the effect of making it a condition of the giving of the supply, that any outstanding charges in respect of a supply given to the company before the appointment of receiver or receiver and manager are paid.