Australia: Lending money to your company to pay wages: leapfrogging the priority of other creditors in a winding-up
When a company is facing short term financial difficulties the directors or shareholders may decide to make a loan to the company to pay wages.
If the loan transaction complies with the requirements of section 560 of the Corporations Act 2001 (Cth) (Act), the third party making the loan to the company can, in the liquidation of the company, seek to be subrogated to the priority position enjoyed by employees in front of ordinary unsecured […]