Waterfall of payments in administration—the position under the Insolvency (England and Wales) Rules 2016
Produced in partnership with Robert Avis of XXIV Old Buildings
Waterfall of payments in administration—the position under the Insolvency (England and Wales) Rules 2016

The following Restructuring & Insolvency practice note Produced in partnership with Robert Avis of XXIV Old Buildings provides comprehensive and up to date legal information covering:

  • Waterfall of payments in administration—the position under the Insolvency (England and Wales) Rules 2016
  • Moratorium debts and Priority pre-moratorium debts
  • Expenses and super-priority for certain contracts
  • Preferential creditors, floating charge holders and the prescribed part
  • Unsecured claims
  • Statutory interest
  • Postponed debts
  • Surplus
  • Further judicial guidance
  • Legal developments
  • More...

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.

Moratorium debts and Priority pre-moratorium debts

The Corporate Insolvency and Governance Act (CIGA 2020) inserts a new Part A1 into IA 1986 which provides for a new insolvency process whereby directors of insolvent companies, or companies that are likely to become insolvent, can obtain a 20 business day moratorium period. This is designed to allow viable businesses time to restructure priority over all other claims. Where administration occurs within 12 weeks of a moratorium, any moratorium debts and ‘priority pre-moratorium debts’ for which the company did not have a payment holiday during the moratorium but which were not paid will have priority over all other claims.

These priority debts are defined in IA 1986, Sch B1, para 64A, as introduced by CIGA 2020, Sch 3, para 31.

For further details on the moratorium procedure, see Practice Note: Corporate Insolvency and Governance Act 2020—moratorium.

Expenses and super-priority for certain contracts

Subject to any priority moratorium debts, the expenses of the administration, including the

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