HomeFWJ TakeawayCompany rescueCompany administrationsWhat happens if a company in administration owes me money?

Assuming that you are not a secured or preferential creditor, as the primary purpose of an administration is to rescue the company, administrators are not ordinarily empowered to make payments to unsecured creditors. However, if there are surplus funds available from the realisations to pay unsecured creditors, an exit route, such as a liquidation or a company voluntary arrangement will have to be implemented in order to make such payments to unsecured creditors

Three categories of debts in an administration

If you are owed money by a company in administration, your debt will generally fall into either of the following three categories

  • secured (split into security via fixed and floating charges);
  • preferential; and
  • unsecured.

Secured creditors

Secured creditors will normally have their security registered at Companies House. For a fixed asset, e.g. a car, a printer or a house, the secured creditor will be paid from any realisations in relation to those specific assets (once the costs of the realisation have been deducted). For a floating charge over an asset, the secured creditor will be paid out from those specific asset realisations only after the preferential creditors (below) have been paid in full and the prescribed part for unsecured creditors (also below) has been set aside.

Preferential creditors

Preferential creditors are creditors who have a statutory preferential right to payment, mainly employees, for example, in respect of their unpaid wages or unpaid pension contributions. Where there is no registered fixed charge, preferential creditors rank ahead of all other creditors when realisations are distributed.

Unsecured creditors

Unsecured creditors are creditors who have no security and are not preferential creditors. Most trade creditors will fall under this category and will rank below secured or preferential creditors.

Please feel free to contact one of our expert insolvency lawyers now for your informal consultation. At Francis Wilks & Jones, we have all the insolvency experience needed to handle any type of insolvency problem. We offer quick and effective insolvency advice, including advice on administration orders, whatever your situation.

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