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Who gets what? - The distribution hierarchy

 

The assets of the company, when realised, have to be distributed in the following order: -

 

1) Assets not available for "distribution"

(Assets which do not ‘belong’ to the company)

  • Assets in which title has been retained (eg. retention of title clause)
  • Assets subject to a fixed charge
  • Property held on trust by the company for the benefit of creditor

 

2) Cost , Charges & Expenses of the Winding-Up

(Costs incurred by the insolvency practitioner realising assets and carrying out statutory requirements)

 

3) Preferential Creditors

(These rank equally amongst themselves)

  • Employees (generally, for unpaid wages, accrued holiday pay)
  • National Insurance Fund: some amounts paid to the employee

 

4) Holders of debentures secured by a floating charge

Where the floating charges was created after 15 September 2003 a ‘prescribed part’ for payment to unsecured creditors may need to be calculated. See ‘“Prescribed Part” - What is it?’

 

5) Unsecured Creditors

  • all other creditors participate in the remaining assets in proportion to the size of their claims
  • since Enterprise Act 2002 this includes any Crown debts (such as VAT and PAYE)

 

 

For impartial, in-depth, one-to-one advice
contact us on 0161 438 8555 or

by email to info@jldllp.co.uk

 




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