When dealing with creditors in insolvency situations, it is vital to remember the order of priority. Who ranks above whom? Where does the bank and HMRC rank? If the bank has security, do employees rank ahead of them? These are all common questions we get asked.
The simplest way to answer these questions is to imagine creditor ranking as a trickle down. Further down the page, we have a written explanation but if you prefer a pictorial format, we have produced an infographic that shows the situation. It has simplified things a little with regard to the “prescribed part” but otherwise is indicative of what happens when a company becomes insolvent.
The full page on creditors ranking can be found at https://www.companyrescue.co.uk/guides-knowledge/guides/who-gets-paid-first-when-a-company-goes-into-liquidation-or-administration-3731/