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of <h1>Section 327: Preferential payments in company winding up, employee dues and key government debts rank ahead of others</h1> In company winding up (other than under the Insolvency and Bankruptcy Code, 2016), certain debts are paid in priority to all others, subject to section 326. These include specified government dues within twelve months before the relevant date; limited wages, salaries, commission, holiday pay, compensation for death or disablement, and welfare fund dues of employees; employer contributions under social security laws; investigation expenses; and certain substituted claims where third parties advanced funds to pay employees. These preferential debts rank equally inter se, abate proportionately if assets are insufficient, and have priority over floating charge debenture holders. They must be discharged forthwith, with limited proof, and constitute a first charge over goods distrained shortly before winding up.
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