DIVIDEND PAYMENT ON LIQUIDATION
POGO Ltd is a manufacturer of traditional toys which has fallen on hard times becuase of
the rise in popularity of electronic games. The company has gone into a creditors' voluntary
winding up. Sam Joplin has been appointed liquidator. He has now compiled a list of
creditors as follows:
Free Trade Bank plc—£4,000,000 (outstanding term loan)
Branigan's Bank plc—£200,000 (working capital loan)
Fred Smith (employee)—£500 (unpaid salary)
Jim Bowen (employee)—£800 (unpaid salary)
Padgett's Metals Ltd—£13,400 (unpaid invoices)
Gordons Printing Ltd—£11,000 (unpaid invoices)
HMRC—£28,600
Total owed—£4,254,300
Branigan's has a floating charge over the whole of the company's assets, dated 15th May
2006 and has chosen not to appoint an administrator.
Sam's fee is £10,000.
Free Trade has a fixed charge over the company's factory, which has already been sold. Free
Trade has received net proceeds of sale of £3,500,000 and are still therefore owed £500,000
by POGO Ltd.
Sam has realised the remaining assets of the company and has £238,300 available for
distribution after deduction of the costs attributable to realising the assets covered by the
floating charge.
FIRST DEDUCTION
Liquidator’s expenses first
238,000 – 10,000 = 228,300
SECOND DEDUCTION
Sum owed to preferential creditors – the employees, Fred and Jim
500 + 800 = 1300
228,300 – 1300 = 227,000
POGO Ltd is a manufacturer of traditional toys which has fallen on hard times becuase of
the rise in popularity of electronic games. The company has gone into a creditors' voluntary
winding up. Sam Joplin has been appointed liquidator. He has now compiled a list of
creditors as follows:
Free Trade Bank plc—£4,000,000 (outstanding term loan)
Branigan's Bank plc—£200,000 (working capital loan)
Fred Smith (employee)—£500 (unpaid salary)
Jim Bowen (employee)—£800 (unpaid salary)
Padgett's Metals Ltd—£13,400 (unpaid invoices)
Gordons Printing Ltd—£11,000 (unpaid invoices)
HMRC—£28,600
Total owed—£4,254,300
Branigan's has a floating charge over the whole of the company's assets, dated 15th May
2006 and has chosen not to appoint an administrator.
Sam's fee is £10,000.
Free Trade has a fixed charge over the company's factory, which has already been sold. Free
Trade has received net proceeds of sale of £3,500,000 and are still therefore owed £500,000
by POGO Ltd.
Sam has realised the remaining assets of the company and has £238,300 available for
distribution after deduction of the costs attributable to realising the assets covered by the
floating charge.
FIRST DEDUCTION
Liquidator’s expenses first
238,000 – 10,000 = 228,300
SECOND DEDUCTION
Sum owed to preferential creditors – the employees, Fred and Jim
500 + 800 = 1300
228,300 – 1300 = 227,000
