s.21Provisions as to cases of insolvency or bankruptcy of employer
21
Section 21Part 5 — Insolvency or Bankruptcy of Employer

Provisions as to cases of insolvency or bankruptcy of employer

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Where the employer has entered into a contract with any insurers in respect of any liability under this Law, to any workman, then, in the event of the employer becoming insolvent or bankrupt, or making a composition or arrangement with his creditors, or, if the employer is a company, in the event of the company having commenced to be wound up or a receiver or manager of the company’s business or undertaking having been duly appointed, or possession having been taken by or on behalf of the holders of debentures secured by a floating charge, of any property comprised in or subject to the charge, the rights of the employer against the insurers as respects that liability shall, notwithstanding anything in the enactments relating to insolvency or bankruptcy and the winding up of companies, be transferred to and vest in the workman, and upon any such transfer the insurers shall have the same rights and remedies and be subject to the same liabilities as if they were the employer, so however that the insurers shall not be under any greater liability to the workman than they would have been under to the employer.
If the liability of the insurers to the workman is less than the liability of the employer to the workman, the workman may prove for the balance in the insolvency, bankruptcy or liquidation, or, as the case may be, he may recover the balance from the receiver or manager.
The amount due in respect of any compensation or liability for compensation under this Law shall —
be deemed a preferential debt within the meaning of section 135 of the Bankruptcy Law (Revised);
in the winding up of a company, whether voluntary, or subject to the supervision of the Court, or by the Court, and notwithstanding section 135 (a) of the Companies Law (1995 Revision), be deemed a preferential debt within the meaning of section 135 of the Bankruptcy Law (Revised); and
where either a receiver 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 those debenture holders of any property comprised in or subject to the charge, then, if the company is not at the time in course of being wound up, be paid in priority to any claim for principal or interest in respect of the debentures:
Provided that such amount due accrued before —
in case (i), the date of the provisional order or absolute order when made on a debtor’s own petition;
in case (ii), the date of the commencement of the winding up of the company;
in case (iii), the date of the appointment of the receiver or of possession being taken as mentioned.
Where the compensation is a half-monthly payment the amount due in respect thereof shall, for the purposes of this provision, be taken to be the amount of the lump sum to which the half-monthly payment could, if redeemable, be redeemed if the employer made an application for that purpose under this Law, and a certificate of the Court as to the amount of such sum shall be conclusive proof thereof.
The provisions of this section, with respect to preferences and priorities, shall not apply where the insolvent, bankrupt or company has entered into such a contract with the insurers as aforesaid.
This section shall not apply where a company is wound up voluntarily merely for the purposes of reconstruction or of amalgamation with another company.

Cross References