One of the more common questions we receive at Chamberlain & Co is often creditor’s rights. What does the creditor receive? Who is liable? Insolvency can be a complicated topic, but we are here to guide you through the process.
What type of creditor are you?
The first and perhaps most important question you should know is which type of creditor are you? There are several types of creditor which we have outlined below:
- Secured Creditors
- Preferential Creditors
- Unsecured Creditors
To be a secured creditor, you must have a registered charge at Company House. If it is a fixed charge, the creditor will receive the proceeds from the sale of the asset after the costs of sale have been deducted. If it is a floating charge, the creditor will be paid in priority to the other creditors once the insolvency procedure costs and all preferential creditors have been paid in full, plus the prescribed part has been set aside.
As a preferential creditor, you are subject to certain limits. The only claims which rank preferentially, are accrued holiday pay, arrears of wages, or pension scheme contributions which remain unpaid.
If you are a shareholder, you will only receive payment once all other creditors have been paid in full.
If you are an unsecured creditor such as an employee for pay in lien of notice or redundancy pay, you will receive money due to you after preferential creditors have been paid in full.
What if I owe money?
Even if the company has gone into insolvency, your debts to it are still due. You must pay any invoices as usual. Should you be aware that the company has become insolvent, you can contact the appointed Insolvency Practitioner to discuss payment arrangements if you want to vary them.
What if I am owed money?
If you know who the IP is, you should contact them to make sure they have your details and amount claimed. The claim will be logged and the money repaid to you, if anything, will differ depending on the type of creditor you are and available funds.
For any specific inquiries, you should contact the IP. However, as a general rule, no further supply should be given to the company without it being requested in writing to the IP.
How will I be paid?
Once the IP has declared a dividend payment to creditors all claims lodged will reviewed and if accepted, the appropriate payment will be made. This is often not in full but expressed as pence in the pound (“P in £”).
How can I tell if a company is insolvent?
It can be a cause for concern if you are a creditor and a business has stopped corresponding with you. All formal insolvency procedures are recorded at Companies House, you will be able to check the register, but listings may not be public until the formal insolvency procedure has begun.
Feeling a little lost? If you need more help and advice please don’t hesitate to give Chamberlain & Co a call on 0113 868 1203. With offices providing national professional Insolvency support from Leeds, London, York and Sheffield Chamberlain & Co is ready to assist you today.