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Creditors in a Liquidation

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It can be a challenging time for creditors when a company, that owes them money, has entered into a formal insolvency process. Quite often the creditors may not know where they stand in terms of recovering the money they are owed.

When (why) would a creditor need this service?

From time to time we instructed by creditors who are owed money from a company that has entered, or is about to enter into an insolvency process. Inevitably the creditor will have concerns about the prospect of recovering the sums owed to them from the insolvent company. In most cases an appointed insolvency practitioner will act in the bests interest of creditors. However, there are instances where creditors form the view that the insolvency practitioner is not acting in their best interests and may wish to explore their options of having the appointed insolvency practitioner replaced.

What are the types of creditors?

The different types of creditors are:

  • Secured;
  • Preferential; and
  • Unsecured.

A secured creditor is anyone who has security (i.e. a charge or debenture) over some or all of the insolvent company’s assets. Upon insolvency, a secured creditor will usually be protected by virtue of their security, subject to it being materialised, provided that there is sufficient value in the asset held as security.

Preferential creditors are creditors who will be paid their debt in priority to unsecured creditors, subject to statutory limits. Where any sums are owed to the preferential creditor over this limit, then this part of the debt will become an unsecured debt. Employees of the insolvent company are usually preferential creditors. HMRC was previously treated as a preferential creditor but is now treated as an unsecured creditor.

An unsecured creditor is generally any creditor who holds no security for the debt and is not a preferential creditor.

What is the list of distribution?

The assets of the insolvent company will be distributed in accordance with the prescribed list of distribution. This is set by law as follows:

  • Secured creditors with fixed charges;
  • Expenses of the winding up (i.e. the Liquidator’s fees and his professional advisor’s fees);
  • Preferential creditors (i.e. employees up to relevant statutory limit applicable at the time);
  • Monies secured by a floating charge (subject to ring-fencing for unsecured creditors);
  • Unsecured creditors; and
  • If there is any surplus, the remainder is distributed to the shareholders of the company.

What if I am not satisfied with the Insolvency Practitioner?

If a creditor is not satisfied that a Liquidator or Administrator is carrying out their functions diligently then a creditor may be able to take steps to have them removed and replaced.

The easiest way to remove a Liquidator and/or Administrator from their position is for the majority of creditors to vote for their removal under s172 of the Insolvency Act 1986. If this cannot be achieved, a creditor may apply to the court for their removal but it should be noted that the threshold for the removal of a Liquidator or Administrator is quite high and the court will only do this in exceptional circumstances.

Is it expensive? What are the likely costs?

We will provide you with an estimate of costs at the outset based on the type of work required.

Our lawyers have extensive experience in advising clients who are creditors of struggling companies and will be able to provide you with bespoke and cost effective advice tailored to your circumstances.

Meet the Creditors in a Liquidation team
Ray Crudgington
Managing Partner
greenwich
02083054224
ray.crudgington@grantsaw.co.uk
Maria Lati
Partner
Head of Residential Property
blackheath
02083054229
maria.lati@grantsaw.co.uk
Mike Clary
Partner
Head of Family
greenwich
02083054237
mike.clary@grantsaw.co.uk
Kalpa Prajapati
Partner
Head of Private Client
blackheath
02083053536
kalpa.prajapati@grantsaw.co.uk
Mario Savvides
Partner
Head of Commercial Property
greenwich
02083053531
mario.savvides@grantsaw.co.uk
Sarah-Kate Jackson
Partner
Head of Litigation
greenwich
02083054236
sarah-kate.jackson@grantsaw.co.uk
Adina-Leigh Collins
Litigation
Solicitor
greenwich
02083053556
adina-leigh.collins@grantsaw.co.uk
Aimal Gram
Commercial Property
Solicitor
greenwich
02083053524
aimal.gram@grantsaw.co.uk
Aisha Mohammed
Residential Property
Solicitor
greenwich
02083054228
aisha.mohammed@grantsaw.co.uk
Aishat Balogun
Aishat Balogun
Family
Solicitor
greenwich
02083054214
aishat.balogun@grantsaw.co.uk
An Le Tran
Commercial Property
Professional Support Solicitor
greenwich
02083054226
anle.tran@grantsaw.co.uk
Angus Young
Litigation
Solicitor
greenwich
02083054225
angus.young@grantsaw.co.uk
Atifha Aftab
Atifha Aftab
Family
Solicitor
greenwich
02083054238
atifha.aftab@grantsaw.co.uk
Bimal Kotecha
Litigation
Solicitor
greenwich
02083053523
bimal.kotecha@grantsaw.co.uk
Charlotte Warren
Charlotte Warren
Private Client
Solicitor
blackheath
02083054231
charlotte.warren@grantsaw.co.uk
Claire Mac Mahon
Litigation
Solicitor
greenwich
02083053537
claire.macmahon@grantsaw.co.uk
Deborah Taite
Residential Property
Solicitor
blackheath
02083053542
deborah.taite@grantsaw.co.uk
Emily Pearce
Residential Property
Solicitor
greenwich
02083053526
emily.pearce@grantsaw.co.uk
Georgia Beales
Litigation
Paralegal
greenwich
02083054206
georgia.beales@grantsaw.co.uk
James McKimm
James McKimm
Corporate and Commercial
Solicitor
greenwich
02083054217
james.mckimm@grantsaw.co.uk
Jeremy Brooks
Jeremy Brooks
Private Client
Solicitor
blackheath
02083053534
jeremy.brooks@grantsaw.co.uk
Joanna Godden
Notary Public
Notary
greenwich
02083083535
joanna.godden@grantsaw.co.uk
Kim Whitaker
Kim Whitaker
Corporate and Commercial
Head of Corporate and Commercial
greenwich
02083053539
kim.whitaker@grantsaw.co.uk
Lauren Smith
Employment and Family
Paralegal
greenwich
02083053543
lauren.smith@grantsaw.co.uk
Maleeha Iqbal
Residential Property
Licensed Conveyancer
greenwich
02083054232
maleeha.iqbal@grantsaw.co.uk
Mandeep Clair
Family
Solicitor
greenwich
02083054235
mandeep.clair@grantsaw.co.uk
Michael Pope
Employment
Consultant Solicitor
greenwich
02083053540
michael.pope@grantsaw.co.uk
Michelle Pinnington
Michelle Pinnington
Residential Property
Solicitor
greenwich
02083054216
michelle.pinnington@grantsaw.co.uk
Noella Gooden
Employment
Solicitor (Australian qualified)
greenwich
02083053543
noella.gooden@grantsaw.co.uk
Raj Waghela
Raj Waghela
Residential Property
Solicitor
greenwich
02083053529
raj.waghela@grantsaw.co.uk
Randeep Thethy
Randeep Thethy
Residential Property
Solicitor
greenwich
02083054209
randeep.thethy@grantsaw.co.uk
Sarah Conner
Sarah Conner
Private Client
Solicitor
blackheath
02083054234
sarah.conner@grantsaw.co.uk
Simran Lalli
Simran Lalli
Employment
Solicitor
greenwich
02083054208
simran.lalli@grantsaw.co.uk
Susan Collins
Commercial Property
Solicitor
greenwich
02083054200
susan.collins@grantsaw.co.uk
Tatiana Zenina
Tatiana Zenina
Private Client
Solicitor
blackheath
02083054239
tatiana.zenina@grantsaw.co.uk
Trisha Djemal
Trisha Djemal
Residential Property
Consultant Solicitor
blackheath
02083053546
trisha.djemal@grantsaw.co.uk
Tyrone Grant
Residential Property
Head of Leasehold Enfranchisement
blackheath
02083053522
tyrone.grant@grantsaw.co.uk
Denise
Accounts Staff
greenwich
02088586971
enquiries@grantsaw.co.uk
Jamie
Support Staff
Head of IT
greenwich
02088586971
enquiries@grantsaw.co.uk
Jayne Lye
Support Staff
Office Manager
greenwich
02083054204
jayne.lye@grantsaw.co.uk
Kasia
Accounts Staff
greenwich
02088586971
enquiries@grantsaw.co.uk
Michael Tobin
Michael Tobin
Support Staff
Marketing and Business Development Manager
greenwich
02083053550
michael.tobin@grantsaw.co.uk
Laura Danquah
Compliance Manager
greenwich
02083054222
laura.danquah@grantsaw.co.uk
Sue Holness
Support Staff
Customer Services
greenwich
02083054221
sue.holness@grantsaw.co.uk