The following Restructuring & Insolvency guidance note Produced in partnership with Robert Avis of XXIV Old Buildings provides comprehensive and up to date legal information covering:
The order of distribution of a company’s assets in administration is found in the Insolvency Act 1986 (IA 1986) and the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024.
For a guide comparing the waterfall of payments across the different insolvency proceedings, see Practice Note: Waterfall of payments—a comparative guide.
The scheme for distribution in administration, after fixed charge holders are repaid, is set out below.
The expenses of the administration, including the remuneration of the administrator and rent, are payable in priority to all other claims, save that where there is a former administrator, 'super priority' is afforded to certain contracts entered into by administrators and certain contracts of employment under IR 2016, SI 2016/1024, r 3.51(1) (from 6 April 2017) and IA 1986, Sch B1, para 99(4)–(5), known as the statutory charge.
The Court of Appeal in Neumans v Andronikou held that the costs of defending a winding-up petition of a company that subsequently goes into administration, are not costs in the administration under Insolvency Rules 1986 (IR 1986), SI 1986/1925, r 2.67 (equivalent to IR 2016, SI 2016/1024, r 3.51) but are costs in the liquidation under IR 1986, SI 1986/1925, r 4.218(3)(h) (equivalent to IR 2016, SI 2016/1024, r 7.108(4)(h)).
A complete list of what constitutes an administration expense is found from 6
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