Preferential Creditors and Other Creditors
See: Insolvency USA Style
Also: Statement of Affairs
Also: Creditors Meeting
There is an order of who gets paid first where a formal act of insolvency exists:
|
1 |
Insolvency Practitioner |
Costs and expenses |
||
|
2 |
Bank, lender |
Debenture holder with fixed charge |
||
|
3 |
VAT, PAYE, NI, staff wages, pensions and holiday pay |
Preferential creditor |
||
|
4 |
Bank, lender |
Debenture holder under a floating charge |
||
|
5 |
Suppliers, utilities, unsecured lending |
Unsecured creditors |
Payments to the above creditors are based on a ‘count back’ method. The insolvency practitioner is the first to be paid in full: if there are sufficient funds remaining the debenture holder (fixed charge) is the next to be paid, then the preferential credi tor and so on, until there are no funds left.
When there are funds left over for unsecured creditors, the funds are distributed proportionally, as follows:
Example:
|
Amount due to unsecured creditors: |
£120,000 |
|
Amount available to unsecured creditors: |
£ 12,000 |
|
equal to 10% of debt |
| Company Name | Amount Owed | Amount Paid |
|
ABC Company |
£40,000 |
£4,000 |
|
123 Company |
£35,000 |
£3,500 |
|
XYZ Company |
£25,000 |
£2,500 |
|
987 Company |
£15,000 |
£1,500 |
| £120,000 | £12,000 |
Relevant Articles
- Related Articles
