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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)



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