04: Distribution of assets

The trustee must pay the bankrupt’s debts in the following order:

The cost of administering the bankruptcy has the highest priority for reimbursement from the debtor’s property.

Preferential debts are those that have priority over ordinary unsecured creditors. If there is insufficient money, each creditor will receive a percentage of the amount due to them. Preferential debts may include employees’ accrued holiday pay, elements of wages owed, and outstanding occupational pension schemes contributions.

Ordinary unsecured creditors can only be paid once both of the above categories of debt have been paid in full. Where there are insufficient funds to pay this category of debts, they are treated equally, with each creditor receiving the same percentage.