Order of payment

Different creditors in an insolvency process are paid in a specific order. Fixed charge holders receive what they are owed when the asset subject to the fixed charge is sold. Any surplus is paid to the liquidator. Payments are then made as follows:

  1. Expenses of winding up;
  2. Preferential debts such as wages or salaries of employees for work carried out in the four months preceding the date of the winding up order, up to a maximum of £800;
  3. Money subject to a floating charge, in order of priority and;
  4. Unsecured creditors, who abate equally.

Anything left over is distributed to shareholders.