Order of priority
From the proceeds of selling assets subject to a fixed charge
1) liquidators fees for realising fixed assets
2) fixed charge creditors (in order of creation subject to registration)
From the proceeds of selling the remaining assets subject to a floating charge
3) liquidator’s general costs and expenses
4) preferential creditors (rank and abate equally e.g. wages to employees - limited to previous 3 months [£800/per employee plus accrued holiday pay & pension].
5) ring-fenced fund (unless floating charge creates pre-Relevant period
6) pay any remaining debt to the fixed charge holder
7) floating charge creditors (in order of creation subject to registration)
From the amount remaining after deductions above PLUS the ring fenced fund
8) unsecured debts - rank and abate equally (employees paid here the balance owed to them, to the extent not preferred). How much does each receive in pence per pound owed?
(I.e total amount available to creditors)/total amount owed to creditors
Once everything has been paid, IF there is any money left …
9) statutory interest accrued since covenant of winding up
10) shareholders
Insolvency procedures
1) do nothing
2) informal settlement negotiations
3) scheme of arrangement
4) creditors voluntary agreement CVA
5) administration
6) administrative receivership
7) liquidation
