Insolvency, Banruptcy and Closure

Order of Priority (Bankruptcy)

The distribution of the bankrupt's assets must be made strictly in the following order:

  1. Secured Creditors
  2. Administration costs paid to the Official Receiver, the Trustee in Bankrtupcy and other professional advisers
  3. Preferential Debts:-

    (A) PAYE monies outstanding

    (B) VAT due up to six months before the Bankruptcy Order

    (C) National Insurance contributions due up to six months before the Bankruptcy Order or one year's assessment of Class 4 Contributions

    (D) Employees arrears of wages or salary due up to four months before the Bankruptcy Order to a maximum of £800

    (E) Accrued holiday renumeration

  4. Ordinary unsecured creditors
  5. Statutory interest paid if a surplus remains after previous claims have been paid
  6. Postponed Creditors, such as the Bankrupt's spouse with provable loan given to the Bankrupt
  7. The Bankruptcy receives any surplus