Who gets paid when a company goes into insolvency – Creditors Priority
We often get asked when dealing with creditors in insolvency situations, what the order of priority is for payments. Who ranks above whom? Where does the bank and HMRC rank? If the bank has security, do employees rank ahead of them?
The simplest answer is…. it depends
We have created a flowchart [click here for creditors priority flowchart] to show some of the possible priority listings which will give you a more in depth look at some of the ifs and buts of the creditors priority.
However your insolvency practitioner will be able to make the necessary arrangements and guide you through the process but in layman’s terms a simplified priority list can be seen in our image:
Of course this is a much simplified view and every company’s situation will be slightly different but it does give you an idea of the rough hierarchy and that HMRC must be paid in full before any Shareholders are made a payment. Our downloadable flow chart gives you more detail on how fixed and floating charge holders will be dealt with.
If you would like more information on any insolvency issues please do get in touch…..