Maximum prescribed part increased from £600,000 to £800,000

On 6 April 2020, the Insolvency Act 1986 (Prescribed Part) (Amendment) Order 2020 came into force increasing the maximum amount of the prescribed part from £600,000 to £800,000

08 April 2020

On 6 April 2020, the Insolvency Act 1986 (Prescribed Part) (Amendment) Order 2020 came into force. This order amends the Insolvency Act 1986 (Prescribed Part) Order 2003, and increases the maximum amount of the prescribed part from £600,000 to £800,000.

Prescribed Part

The 'prescribed part' is the term given to a portion of funds realised from assets charged by way of floating, but not fixed, charge, where:

  1. the floating charge was created on or after 15 September 2003; and
  2. the company which granted the charge is in Administration, Liquidation or, in rare cases, Receivership.

The portion, calculated as a percentage of total realisations, is made available to ordinary unsecured creditors, who otherwise rank behind secured creditors and, if a full security net is in place, may see little or no return from a formal insolvency process. 

Application and extent

The changes apply:

  1. to formal insolvency processes commenced in any part of Great Britain; and
  2. where the floating charge affected was created on or after 6 April 2020 or (while created prior to) ranks equally with or after a floating charge created on or after 6 April 2020.

Key contact

Andrew Eaton

Andrew Eaton Partner

  • Head of Corporate Restructuring and Insolvency
  • Banking
  • Corporate

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