Distribution

A distribution (also called a dividend) is a payment made by a liquidator, trustee in bankruptcy, or administrator to creditors from the realised assets of the insolvent estate. Distributions follow the statutory order of priority set out in the Insolvency Act 1986: expenses of the proceedings, preferential creditors, floating charge holders, unsecured creditors, statutory interest, then members.

In practice

Before making a distribution, the office-holder must give notice to creditors inviting proofs of debt by a specified deadline (the last date for proving). Only creditors who have submitted an admitted proof are entitled to participate. Distributions are made proportionally within each class of creditor. An interim distribution may be made before the final realisation of all assets. The office-holder must report on distributions to the court and creditors.