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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)



It should be noted that in April 2020 changes may be made to the statutory order of creditors as it has been announced recently that HMRC is to be a preferential creditor with respect to certain taxes.



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