When a company or individual becomes insolvent, there is almost never enough money to go round. The law steps in with a strict pecking order that decides who gets paid first, who shares what is left, and who bears the loss. As a solicitor, you will advise lenders, suppliers, employees and directors who all want to know one thing: where do I stand and how much will I recover? Understanding the priority rules — and the tools used to unwind unfair dealings before collapse — is at the heart of insolvency practice.
What this lesson covers:
- Foundations and Order of Distribution — the statutory hierarchy, the pari passu principle, and where each class of creditor sits.
- Secured Creditors and Charges — fixed versus floating charges, how each ranks, and how a charge is characterised in substance.
- Registration of Charges — the deadline for registering, and what happens to security and the underlying debt if you miss it.
- Preferential Creditors and the Prescribed Part — employee and tax claims that jump the queue, and the slice ring-fenced for unsecured creditors.
- Challenging Antecedent Transactions — how a liquidator unwinds undervalues, preferences and invalid floating charges.
- Set-Off, Administration and Bankruptcy — mutual dealings, the administration moratorium, and the order for an individual's estate.