May 2010

Chapter 36A Distributions

Index and introduction

36A.1 Index

This chapter is divided into parts as follows:

Index and introduction (paragraphs 36A.1 to 36A.6)

Part 1  Distribution costs (paragraphs 36A.7 to 36A.18)

Part 2  Distribution procedure (paragraphs 36A. 19 to 36A.35)

Part 3  Problems in paying dividends (paragraphs 36A. 36 to 36A.47)

Part 4  Accounting for future debts, interest and unproved creditors (paragraphs 36A.48 to 36A.54)

Part 5  Final distribution and application of assets in company cases (paragraphs 36A.55 to 36A.102)

Part 6  Final distribution and application of assets in bankruptcy cases (paragraphs 36A.103 to 36A.119)

Part 7  Final distribution and application of assets in partnership cases (paragraphs 36A.120 to 36A.131)

Part 8  Return of capital to contributories or surplus to bankrupt after distribution (paragraphs 36A.132 to 36A.144)

Annex A Summary detailing how to account for assets realised and payments made

Annex B Example of a distribution from joint and separate estates under the The Insolvent Partnerships Order 1994 (IPO94)

Annex C Guidance showing expected hours to be spent on distributions, and rates according to The Insolvency Regulations 1994 (as amended) (IRegs94).

36A.2 General introduction

As explained in Chapter 36, the provisions of the Enterprise Act 2002 (EA2002) enabled The Insolvency Service to make a change to its financial policy at that time. The principle of this change is that creditors will pay for the full costs of the official receiver's administration via a single administration fee funded in part from the petition deposit, and a general Secretary of State's administration fee chargeable only in compulsory insolvencies.  Full details of the fees and expenses charged in both company winding up and bankruptcy proceedings,  and the primary and secondary legislation governing those fees and expenses, are included at Chapter 36.

36A.3 Distribution by means of a dividend

Whenever the liquidator or trustee has sufficient funds in hand for the purpose he/she shall, subject to the retention of such sums as may be necessary to meet the expenses of the winding up/bankruptcy, declare and distribute dividends among the creditors in respect of the debts for which they have proved [note 1] [note 2]. In bankruptcies the  trustee may need to seek the permission of the creditor’s committee to deal with the division of property amongst creditors, where, due to the specific nature or special circumstances of that property, it cannot easily or advantageously be sold.  See Part 4 of this chapter,  paragraph 36A.54  for further information on this.