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In the above hierarchy it can be seen that ‘preferential creditors’ will be paid back after fixed charge (secured) creditors and the fees, expenses and disbursements of the officeholder, and before floating chargeholders and unsecured or ‘trade’ creditors.
Employees are preferential creditors regarding any unpaid wages (up to a maximum of £800 or four months unpaid wages/salary – whichever is the lesser), pension scheme contributions and all holiday pay are entitled to be paid.
HMRC are ‘secondary preferential creditors’, meaning that they are paid after preferential creditors, but before floating chargeholders, in respect of:
• Value Added Tax (VAT), and debts that relate to the following taxes:
If employees are owed more than £800, and if HMRC are owed moneys for unpaid tax relating, for example, to Corporation Tax, they will form part of the ‘unsecured creditor’ group for this element of their claim in the Liquidation.
[See ‘VAT’, ‘Value Added Tax’, ‘Pay As You Earn’, ‘PAYE’, ‘Administrator’, ‘Liquidator’, ‘Administration’, ‘Insolvency Act’, ‘Shareholders’ and ‘Prescribed Part’.]
A pre-packaged insolvency sale (pre-pack) is one which is structured, negotiated and agreed between an ‘Insolvency Practitioner (IP) in waiting’ and a buyer before the proposed insolvency procedure begins and the IP is formally appointed.
This means that the buyer must have its own structures and funding in place before the deal is completed. Once terms are agreed, the IP is appointed and the sale will normally be completed soon after – usually within minutes.
