Provisions as to insolvency or bankruptcy of employer

(1) Where the employer has entered into a contract with any insurers in respect of any liability under this Act 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. (2) 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 or bankruptcy or liquidation, or as the case may be, he may recover the balance from the receiver or manager. (3) The amount due in respect of any compensation or liability for compensation under this Act shall, (a) be deemed a preferential debt within the meaning of section 37 of the Bankruptcy Act, Cap. 244; (b) in the winding-up of a company, whether voluntary or subject to the supervision of the court, or by the court, be deemed a preferential debt within the meaning of section 37 of the Bankruptcy Act, Cap. 244; (c) 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 44 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. (4) Subsection (3) of this section applies if the amount due accrued before the following dates, (a) in subsection (3) (a) of this section the date of the receiving order; (b) in subsection (3) (b) of this section the date of the commencement of the winding-up of the company; (c) in subsection (3) (c) the date of the appointment of the receiver or of possession being taken as mentioned. Lump sum in lieu of half monthly (5) 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 Act, and a certificate of the court as to the amount of such sum shall be conclusive proof thereof. No priority of insured. Voluntary liquidation (6) The provisions of this section with respect to the preferences and priorities shall not apply where the insolvent or bankrupt or the company has entered into such a contract with the insurers described in subsection (1) of this section. (7) This section shall not apply where a company is wound-up voluntarily merely for the purposes of reconstruction or of amalgamation with another company.