Suppose creditor A is owed 200,000 rupees and creditor B 400,000; total debt is 600,000. Only 300,000 is available for distribution.
A receives 100,000 and B receives 200,000.
The ratio of claims is 1:2, so the available proceeds follow the same ratio. The unpaid balance is not automatically extinguished merely because the available estate has been distributed.
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Worked example: two creditors
Kitab al-Hajr: Insolvency, Interdiction and Creditors’ Rights
Suppose creditor A is owed 200,000 rupees and creditor B 400,000; total debt is 600,000. Only 300,000 is available for distribution.
A receives 100,000 and B receives 200,000.
The ratio of claims is 1:2, so the available proceeds follow the same ratio. The unpaid balance is not automatically extinguished merely because the available estate has been distributed.