Timing and size of distributions—the position under the Insolvency (England and Wales) Rules 2016
Produced in partnership with South Square Chambers and BDO
Timing and size of distributions—the position under the Insolvency (England and Wales) Rules 2016

The following Restructuring & Insolvency practice note produced in partnership with South Square Chambers and BDO provides comprehensive and up to date legal information covering:

  • Timing and size of distributions—the position under the Insolvency (England and Wales) Rules 2016
  • Liquidation and bankruptcy
  • Administration

Liquidation and bankruptcy

When a sufficient fund of assets has been collected and realised, the liquidator/trustee in bankruptcy (trustee) may begin to discharge the liabilities of the company/bankrupt. The assets are taken to include all the property belonging to the company/bankrupt at the date of liquidation/bankruptcy. The general rule in relation to both procedures is that, after the payment of expenses and preferential debts, the debts of the company/bankrupt rank equally between themselves, and shall be applied to the payment of ordinary creditors pari passu (ie equally and in the right order) (sections 107 and 328(3) of the Insolvency Act 1986 (IA 1986) and of the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, r 14.12). For more information on the order of payments, see Practice Notes: Waterfall of payments in liquidation—the position under the Insolvency (England and Wales) Rules 2016 and Waterfall of payments in bankruptcy—the position under The Insolvency (England and Wales) Rules 2016.

Whenever the liquidator/trustee has sufficient funds in the insolvency estate, they must, subject to the retention of sums as may be necessary for the expenses of the liquidation/bankruptcy, declare and distribute dividends among the creditors in respect of the debts for which they have respectively proved (IR 2016, SI 2016/1024, r 14.27 and IA 1986, s 324).

This rule recognises that if the liquidator/trustee waited until all the assets

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