Insolvency Act 1986

[F1Property subject to floating charge]E+W+S

[F2176ZA[F2Payment of expenses of winding up (England and Wales)]E+W+S

(1)The expenses of winding up in England and Wales, so far as the assets of the company available for payment of general creditors are insufficient to meet them, have priority over any claims to property comprised in or subject to any floating charge created by the company and shall be paid out of any such property accordingly.

(2)In subsection (1)—

(a)the reference to assets of the company available for payment of general creditors does not include any amount made available under section 176A(2)(a);

(b)the reference to claims to property comprised in or subject to a floating charge is to the claims of—

(i)the holders of debentures secured by, or holders of, the floating charge, and

(ii)any preferential creditors entitled to be paid out of that property in priority to them.

(3)Provision may be made by rules restricting the application of subsection (1), in such circumstances as may be prescribed, to expenses authorised or approved—

(a)by the holders of debentures secured by, or holders of, the floating charge and by any preferential creditors entitled to be paid in priority to them, or

(b)by the court.

(4)References in this section to the expenses of the winding up are to all expenses properly incurred in the winding up, including the remuneration of the liquidator.]

[F3176ZBApplication of proceeds of office-holder claimsE+W+S

(1)This section applies where—

(a)there is a floating charge (whether created before or after the coming into force of this section) which relates to property of a company which—

(i)is in administration, or

(ii)has gone into liquidation; and

(b)the administrator or the liquidator (referred to in this section as “the office-holder”) has—

(i)brought a claim under any provision mentioned in subsection (3), or

(ii)made an assignment (or, in Scotland, assignation) in relation to a right of action under any such provision under section 246ZD.

(2)The proceeds of the claim or assignment (or, in Scotland, assignation) are not to be treated as part of the company's net property, that is to say the amount of its property which would be available for satisfaction of claims of holders of debentures secured by, or holders of, any floating charge created by the company.

(3)The provisions are—

(a)section 213 or 246ZA (fraudulent trading);

(b)section 214 or 246ZB (wrongful trading);

(c)section 238 (transactions at an undervalue (England and Wales));

(d)section 239 (preferences (England and Wales));

(e)section 242 (gratuitous alienations (Scotland));

(f)section 243 (unfair preferences (Scotland));

(g)section 244 (extortionate credit transactions).

(4)Subsection (2) does not apply to a company if or in so far as it is disapplied by—

(a)a voluntary arrangement in respect of the company, or

(b)a compromise or arrangement agreed under Part 26 [F4or 26A] of the Companies Act 2006 (arrangements and reconstructions).]

[F5176A Share of assets for unsecured creditorsE+W+S

(1)This section applies where a floating charge relates to property of a company—

(a)which has gone into liquidation,

(b)which is in administration,

(c)of which there is a provisional liquidator, or

(d)of which there is a receiver.

(2)The liquidator, administrator or receiver—

(a)shall make a prescribed part of the company’s net property available for the satisfaction of unsecured debts, and

(b)shall not distribute that part to the proprietor of a floating charge except in so far as it exceeds the amount required for the satisfaction of unsecured debts.

(3)Subsection (2) shall not apply to a company if—

(a)the company’s net property is less than the prescribed minimum, and

(b)the liquidator, administrator or receiver thinks that the cost of making a distribution to unsecured creditors would be disproportionate to the benefits.

(4)Subsection (2) shall also not apply to a company if or in so far as it is disapplied by—

(a)a voluntary arrangement in respect of the company, or

(b)a compromise or arrangement agreed under [F6Part 26 [F7or 26A] of the Companies Act 2006 (arrangements and reconstructions)].

(5)Subsection (2) shall also not apply to a company if—

(a)the liquidator, administrator or receiver applies to the court for an order under this subsection on the ground that the cost of making a distribution to unsecured creditors would be disproportionate to the benefits, and

(b)the court orders that subsection (2) shall not apply.

(6)In subsections (2) and (3) a company’s net property is the amount of its property which would, but for this section, be available for satisfaction of claims of holders of debentures secured by, or holders of, any floating charge created by the company.

(7)An order under subsection (2) prescribing part of a company’s net property may, in particular, provide for its calculation—

(a)as a percentage of the company’s net property, or

(b)as an aggregate of different percentages of different parts of the company’s net property.

(8)An order under this section—

(a)must be made by statutory instrument, and

(b)shall be subject to annulment pursuant to a resolution of either House of Parliament.

(9)In this section—

• “floating charge” means a charge which is a floating charge on its creation and which is created after the first order under subsection (2)(a) comes into force, and

• “prescribed” means prescribed by order by the Secretary of State.

(10)An order under this section may include transitional or incidental provision.]