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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The Council of the EU and European Parliament negotiators reached provisional agreement on a directive harmonising insolvency law across EU member states. The directive establishes common rules on avoidance actions, asset tracing through bank account registers, mandatory pre-pack proceedings, directors' duties to file within three months of financial distress and creditors' committees. Member states have two years and nine months to transpose the directive into national law, replacing the current system where cross-border investors must navigate up to 27 different national insolvency regimes.

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