Order of payments

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The primary function of office-holders in both corporate and personal insolvency is to collect in the assets belonging to a company or individual, realise and distribute them to the company's or individual's creditors in accordance with the statutory waterfall.

For reading on the order of payments, see Practice Notes:

  1. •

    Waterfall of payments—a comparative guide

  2. •

    Waterfall of payments in administration

  3. •

    Waterfall of payments in liquidation

  4. •

    Waterfall of payments in administrative receivership

  5. •

    Waterfall of payments in bankruptcy

The prescribed part

The prescribed part was introduced by the Enterprise Act 2002 as part of a package of major reforms to the corporate insolvency regime. It created a new section 176A of the Insolvency Act 1986 (IA 1986).

IA 1986, s 176A applies where a company has granted a floating charge on or after 15 September 2003 and gone into one of the following insolvency procedures:

  1. •

    liquidation

  2. •

    administration

  3. •

    provisional liquidation

  4. •

    receivership

In these insolvency procedures, the office-holder is required to set aside a portion (a ‘prescribed part’) of the company’s ‘net property’ to be available in

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