At Bankruptcy Solicitors, we understand the challenges faced by creditors when a company that owes them money has entered a formal insolvency process. We find that more often than not, the creditors may not know where they stand in terms of recovering the money they are owed.
At Bankruptcy Solicitors, we understand the challenges faced by creditors when a company that owes them money has entered a formal insolvency process. We find that more often than not, the creditors may not know where they stand in terms of recovering the money they are owed.
There are three different types of creditors:
- Secured;
- Preferential; and
- Unsecured
What is the list of distribution?
The assets of the insolvent company will be distributed in accordance with the prescribed list of distribution. This is set by law as follows:
- Secured creditors with fixed charges;
- Expenses of the winding up (i.e. the Liquidator’s fees and his professional advisor’s fees);
- Preferential creditors (i.e. employees up to relevant statutory limit applicable at the time);
- Monies secured by a floating charge (subject to ring-fencing for unsecured creditors);
- Unsecured creditors; and
- The remainder is distributed to the shareholders of the company, if there is any surplus.
What if I am not satisfied with the Insolvency Practitioner?
If a creditor is not satisfied that a Liquidator or Administrator is carrying out their functions diligently, a creditor may be able to take steps to have them removed and replaced.
The easiest way to remove a Liquidator and/or Administrator from their position is for the majority of creditors to vote for their removal under Sections 171 & 172 of the Insolvency Act (1986). If this cannot be achieved, a creditor may apply to the court for their removal provided the creditor can show a good cause for removal of a Liquidator or Administrator. It should be noted that the statutory provisions offer a wide discretion to the court when assessing whether or not to remove an insolvency practitioner from office.
How much does it cost?
From the outset, Bankruptcy Solicitors will provide you with an estimate of costs based on the type of work required.
For more information, please contact our team of experts by emailing insolvency@bankruptcy-solicitors.com or call 020 8308 3610 today.