A company with floating charge assets goes into liquidation. After preferential creditors, which sum is set aside before the floating charge holder is paid, for a floating charge created after 6 April 2020?
Answer and explanation
Correct answer: A. The prescribed part for unsecured creditors, up to a maximum of £800,000
- Step 1: Section 176A of the Insolvency Act 1986 requires a prescribed part of floating charge realisations to be set aside for unsecured creditors.
- Step 2: The part is 50 percent of the first £10,000 and 20 percent of the rest, with a cap of £800,000 for floating charges created on or after 6 April 2020.
Answer
The prescribed part for unsecured creditors, up to a maximum of £800,000.
Why not the others: Shareholders rank last; a fixed charge shortfall is an unsecured claim and takes no priority; £600,000 was the earlier cap.
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