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Section 107 of the Act outlines a hierarchical system for settling the debts and claims of creditors and members once a company is placed into liquidation. The overarching purpose is to classify each claim, assign a priority based on the statutory framework, and ensure a fair, methodical distribution of the insolvent estate. Determination of Debt Class The liquidator’s first responsibility under Section 107 is to determine and allocate each claim to the appropriate class. This allocation is based on the descriptions provided in subsection (3), and it has significant implications for the order in which those claims are satisfied. A creditor in a class that ranks higher is entitled to receive payment ahead of creditors in lower-ranked classes. Classes of Debt (a) Class A – Post-Commencement Financing Class A encompasses debts arising from any financing provided after the commencement of insolvency proceedings. Because this financing is typically vital to keep the company operational or to effectuate a workable restructuring plan, it is granted the highest level of priority. This ensures that third-party financiers, who extend funds when the company is already distressed, can do so with confidence that they stand first in line to be repaid. (b) Class B – Preferential Debt Class B refers to preferential debts, which outrank most other secured and unsecured claims except those falling under Class A. These preferential debts typically include unpaid employee wages for services rendered in the four months preceding liquidation, as well as rates, taxes, or similar public levies that became due within the twelve months prior to the insolvency. Preferential debts are paid equally among themselves, and if the available estate cannot cover the total sum, they are distributed proportionally to each creditor in this class. (c) Class C – Secured Debt Class C applies to creditors whose loans or advances are secured by a fixed charge over company property. A fixed charge gives the lender the right to recoup its debt from the specific asset(s) identified in the charge before other creditors can receive anything from those assets. This class, although still below Class A and B, maintains a stronger position than unsecured claims. (d) Class D – Debt Owed to Directors or Former Directors Class D captures debts owed to directors or former directors within the year preceding the commencement of winding-up, provided these debts do not fall under Class E (discussed below). By isolating the director’s claim in a specific class, the law aims to ensure directors do not enjoy unmerited preference over external creditors. Nonetheless, it distinguishes ordinary directors’ debts (Class D) from those that may involve improper benefits or excessive interest (Class E). (e) Class E – Excess Benefit or Excess Interest Class E pertains to debts (or parts of debts) identified as involving an excess benefit or an imposition of interest that exceeds a particular threshold above the Bank of Ghana’s policy rate. If a creditor is found to have received—or attempted to receive—an unjustified gain, the amount that exceeds the permissible limit is relegated to this lowest-priority category. COMMENTARY AND POLICY RATIONALE Encouraging Rescue and Reorganisation Post-Commencement Financing (Class A) sits at the top of the hierarchy to incentivise outside parties to infuse critical capital into a failing business. Such funds can preserve the company as a going concern, protect employees from abrupt job loss, and potentially enable higher overall recoveries for creditors. The granting of supreme priority to post-commencement lenders underscores a legislative choice to prioritize the survival of viable businesses. Protection of Vulnerable Creditors and the Public Fisc Preferential debts (Class B) are intentionally set near the pinnacle of the hierarchy. Employees’ wages are given priority to avert personal hardship that would result if individuals were left unpaid for recent work. Government charges (such as taxes and rates) also enjoy elevated standing to safeguard the public interest and uphold the principle that vital state functions should not be jeopardized by widespread insolvencies. Upholding Security Interests and Lending Confidence Secured debts (Class C) reinforce the notion that creditors who have lawfully obtained a fixed charge over specific assets are entitled to rely on those assets for repayment. This fosters a stable lending environment, as creditors can have some reassurance that their security will be honored in insolvency, thereby encouraging the provision of credit at more favorable terms. Avoiding Insider Abuse The separate classification for debts owed to directors or former directors (Class D) addresses concerns of insider advantage or collusion. Placing such claims below preferential or secured claims but ahead of ordinary unsecured debts (unless there is an element of impropriety) indicates a careful balancing betwe