MENU

Section 474 of Insolvency Act CAP 53: Share of assets to be made available for unsecured creditors where floating charge relates to company's property

    

(1) This section applies to a company in respect of which a floating charge relates to its property—
(a) if the company is in liquidation or under administration; or (b) if a provisional liquidator is appointed in respect of it.
(2) If this section applies to a company, the liquidator, administrator or provisional liquidator—
(a) shall make available for the satisfaction of unsecured debts such portion of the company's net assets as is prescribed by the insolvency regulations for the purposes of this subsection; and
(b) may not distribute that part to the proprietor of a floating charge except to the extent that it exceeds the amount required for the satisfaction of unsecured debts.
(3) Subsection (2) does not apply to a company if—
(a) the company's net assets are less than the minimum prescribed by the insolvency regulations for the purposes of this subsection; and
(b) the liquidator, administrator or provisional liquidator believes that the cost of making a distribution to unsecured creditors would be disproportionate to the benefits.
(4) Subsection (2) also does not apply to a company if, or in so far as, it is disapplied by— (a) a voluntary arrangement in respect of the company in accordance with Part IX; or (b) a compromise or arrangement agreed under the Companies Act (Cap. 486).
(5) Subsection (2) also does not apply to a company if—
(a) the liquidator, administrator or provisional liquidator applies to the Court for an order under this subsection on the ground that the cost of making a distribution to unsecured creditors would be disproportionate to the benefits;
(b) a holder of a floating charge applies to the Court on the grounds that the effect of subsection
(2) unfairly harms its interests; and
(c) as a result of such an application, the Court orders that subsection (2) is not to apply or is to apply subject to the conditions the Court considers just.
(6) In subsections (2) and (3) a company's net assets is the amount of its assets that would, but for this section, be available for satisfaction of claims of holders of debentures secured by, or holders of, any floating charge created by the company.
(7) The regulations referred to in subsection (2) prescribing part of a company's net assets may, in particular, provide for its calculation—
(a) as a percentage of the company's net assets; or
(b) as an aggregate of different percentages of different parts of the company's net assets.
(8) In this section, "floating charge" means a charge that is a floating charge on its creation and that is created after the regulations referred to in subsection (2)(a) take effect.

« Previous:   Section 473 - Expenses of liquidation to have priority over claims under floating charge          Next: »   Section 475 - Power of the Court to appoint special manager of company's business or property when company is in liquidation or provisional liquidator appointed

Disclaimer: This document is not to be taken as legal advise.

Enhance Your Research with Bookmarks and Annotations

Here's how you can use these features:

  • To bookmark this page, click the "Bookmark this Page" button below the document title.
  • To add an annotation, highlight text in the document and select "Add Annotation" from the toolbar that appears.
  • These features are great for organizing your research and keeping track of key information.
  • You can view and manage your bookmarks and annotations on your Bookmarks and Annotations page.

Cited By:

More Sections