Section 537

(1) This section applies where a person ceases to be the administrator of a company, whether by reason of resignation, removal from office, cessation of appointment, death or otherwise.

(2) The former administrator's remuneration and expenses shall be-

(a) charged on and payable out of property of which he had custody or control immediately before cessation; and

(b) payable in priority to any security to which section 510 of this Act applies.

(3) A sum payable in respect of a debt or liability arising out of a contract, including a contract for post-commencement financing, entered into by the former Administrator or a predecessor before cessation shall be-

(a) charged on and payable out of property of which the former Administrator had custody or control immediately before cessation; and

(b) payable in priority to any charge arising under subsection (2).

(4) In this section-

(a) "cessation" means the time when he ceases to be the company's Administrator;

(b) "former Administrator" means the person referred to in subsection (1);

(c) subsection (3) applies to a liability arising under a contract of employment which was adopted by the former administrator or a predecessor before cessation; and for that purpose-

(i) action taken within 14 days after an Administrator's appointment shall not be taken to amount or contribute to the adoption of a contract,

(ii) no account shall be taken of a liability which arises, by reference to anything which is done or which occurs before the adoption of the contract of employment, and

(iii) no account shall be taken of a liability to make a payment other than wages or salary.

(5) In subsection (4) (c) (iii), "wages or salary" includes-

(a) a sum payable in respect of a period of holiday, for which purpose, the sum shall be treated as relating to the period by reference to which the entitlement to holiday accrued;

(b) a sum payable in respect of a period of absence through illness or other good cause;

(c) a sum payable in lieu of holiday;

(d) in respect of a period, a sum which would be treated as earnings for that period for the purposes of an enactment on social security; and

(e) a contribution to an occupational pension scheme.