This table provides a summary of the order of creditor and contributory ranking on a debtor's insolvency. Click on each jurisdiction for further information and to check the law stated date.
This table is part of the global guide to restructuring and insolvency law. Reserve funds for expenses: Administrative expenses and fees: Creditors with general priority labour claims. All unsecured creditors and unpaid non-labour claims with general priority.
Expenses of the winding-up including payment of the liquidator. Unpaid wages, unpaid superannuation contributions, and other employee entitlements. Subject to the rights of secured creditors, the assets of a company in liquidation are applied in the following order: Costs and expenses properly incurred in the liquidation in accordance with the prescribed priority.
Preferential claims admitted by the liquidator. All other claims admitted by the liquidator. However, if there are insufficient assets of the company to meet all these claims, these will rank pari passu among themselves.
Any remaining surplus is distributed to the shareholders. The ranking of creditors and shareholders are as follows: Creditors with a mortgage or fixed charge: Costs of insolvency proceedings: Preferential payments, such as unpaid taxes, contributions to occupational pension schemes and liability for compensation for injury or occupational disease.
Fees of the judicial trustee. Labour-related and occupational accident claims, for services rendered after the bankruptcy decree.
Funds provided by creditors to the bankruptcy estate. Expenses from the bankruptcy proceeding and court costs. Obligations from juridical acts performed during judicial reorganisation, or after the bankruptcy decree; expenses and taxes incurred after the bankruptcy decree.
Labour-related, limited to minimum wages; occupational accident claims. Secured claims to the limit of the value of the encumbered asset.
Contractual penalties and fines for breach of criminal or administrative including tax related fines. Subordinate claims such as claims of partners and officers without an employment bond. Subject to the rights of secured creditors who have a prior claim to them, the assets of a company in liquidation are applied in the following order of priority: The costs and expenses of the liquidator.
Preferential claims for example, wages, pension contributions and medical insurance due to Liquidating a business uk ranking or social security payments and tax owed to the BVI government. Unsecured creditors' claims admitted in the liquidation.
Interest incurred by creditors post-liquidation.
Any surplus is distributed to the shareholders. Preferred unsecured claims, including: Property which is subject to valid fixed security interests will be reserved to the secured creditors benefiting from that security.
Payment of claims secured by a floating charge. Payment of the ordinary unsecured creditors. Payment of contractually subordinated creditors. Payment of creditors whose claims derive through shares in the company by way of dividends or redemption proceeds.
Payment of post-liquidation interest on any debts. Any balance is returned to the shareholders in accordance with their entitlements "Liquidating a business uk ranking" the articles of association. Creditors of common interest liabilities. Costs of the winding-up. Any amount secured by a floating charge. Deferred debts, such as sums due to members for dividends declared but not paid.
The appropriate legal ranking for creditors in civil and commercial matters is as follows: Privileged creditors, secured creditors or mortgagees. Debts of a labour nature not advanced under the Labour Code or other law relating to the worker's social security or health. Costs of restructuring Liquidating a business uk ranking of a company, including fees of the officials and auxiliaries involved in the process.
Loans consented by financial intermediation entities or other third parties providing funding duly authorised by the court. The debts of essential providers and suppliers of public services duly authorised by the court. Debts resulting from the execution of contracts that remain in force after the initiation of the restructuring process. Employees' pre-petition claims benefiting from a statutory super-privilege in particular, wages in arrears for the previous 60 days before the opening judgment.
Post-petition court expenses validly incurred after the opening judgment. Lenders that extended credit to a company as part of a workout agreement during conciliation proceedings.
In safeguard and rehabilitation proceedings, post-petition claims benefit from a statutory privilege provided they: These
Liquidating a business uk ranking claims must be paid when they fall due. If not, they rank ahead of both secured and unsecured pre-filing claims in liquidation: Claims of post-petition creditors not qualifying for the statutory privilege above rank pari passu with all unsecured pre-filing claims.
Shareholders do not receive any repayment of their capital investment, unless a surplus remains after all the creditors have been paid in full which is extremely rare.
In liquidation as opposed to insolvency proceedings, certain pre-filing claims rank pari passu with the post-petition claims set out in the fourth bullet point above for example, claims secured by a mortgage or by a lien over movables with a retention right and claims secured by a pledge on equipment. Costs of the insolvency proceedings. Insolvency estate creditors for example, from new contracts signed by the insolvency administrator.
Subordinated creditors for example, claims for repayment of shareholder loans. Claims arising from post-filing financing or credits excluding any equity contributions provided on the basis of a ratified recovery or reorganisation plan. Claims of unpaid wages that arose two years before the declaration of bankruptcy, termination compensation and lawyers' claims that date up to six months prior to the declaration of bankruptcy, social security contributions, and claims of the state arising from value added tax VATand its surcharges.
"Liquidating a business uk ranking" claims of the state excluding claims arising from VAT. On a company's insolvency creditors will rank in the following order of priority: Liquidator's fees and expenses of the winding up. Preferential debts rent due to a landlord, wages and salaries, unpaid income tax and social security contributions. Any surplus is distributed to shareholders according to their rights and interests. Secured creditors assets do not form part of the body of assets available for distribution to creditors on liquidation.
Secured creditors in respect of immovable property are entitled to repaid as a preference from the realisation of the property to which the security relates, in order of the date of registration of the bond. Secured creditors with a security interest in intangible movable assets are entitled to the proceeds of sale of the collateral, which must be applied in a specified order. Costs, charges and expenses properly incurred in the liquidation.
Preferential creditors including employees.