728.This section inserts a new section 176A (Share of assets for unsecured creditors) after section 176 of the Insolvency Act 1986. Section 176A provides for a prescribed part (a percentage share of the company’s net property (as defined)) to go to unsecured creditors, although the percentage itself will be prescribed by Statutory Instrument (subsections (7)-(8)), the setting of which percentage will be subject to consultation.
729.Where a company has gone into liquidation, administration, provisional liquidation or receivership, the office-holder will make part of the company’s net property available to unsecured creditors (i.e. after taking into account any preferential debts, any liability subject to a fixed charge and the costs of realising the company’s property). However, it will not be necessary for the office-holder to distribute funds to unsecured creditors if they are less than the prescribed minimum, and he or she thinks that the cost of making a distribution would be disproportionate to the benefits. Where the prescribed part is greater than or equal to the minimum, but the costs of distribution are disproportionate to the benefits, the office holder will be able to apply to the court to waive the requirement.