Statutory Order of Priority Flashcards
What is the statutory order of priority meaning?
When company liquidated, assets must be distributed in strict legal order
What is the statutory order in order?
1) Liquidator’s fees for fixed assets
2) Fixed charge holders
3) Liquidator’s general fees and expenses
4) Preferential creditors
5) Prescribed part fund
6) Floating charge holders
7) Unsecured creditors
8) Interest on unsecured debts
9) Shareholders
What are fixed charges?
Secured against specific assets
What are floating charges?
Cover classes of assets generally
Who does fixed charge holders rank higher than?
Floating and unsecured creditors
What are the tiers of preferential creditors?
Tier 1 – Employee wages, holiday pay
Tier 2 – PAYE, National Insurance, VAT
What is the maximum per employee?
£800
What is a prescribed part fund?
Prevents unsecured creditors from floating charge holders taking everything
What is the calculation of prescribed part fund?
50% of first £10,000 – 20% of the remainder
What is the cap on prescribed part fund?
£800,000
How are unsecured creditors paid?
Proportionally based on how much they are owed
