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KembaraXtra – Legal Terms – Preferential Debts
Preferential debts are certain debts that receive priority payment during bankruptcy or company winding-up.
Under the Insolvency Act 1986, these debts rank ahead of ordinary unsecured creditors and creditors secured only by floating charges.
Examples include certain employee wage claims and pension-related liabilities.
Since 1 December 2020, some debts owed to HM Revenue and Customs regained preferential status.
The purpose of preferential debt rules is to protect particular categories of vulnerable creditors.
Preferential debts are certain debts that receive priority payment during bankruptcy or company winding-up.
Under the Insolvency Act 1986, these debts rank ahead of ordinary unsecured creditors and creditors secured only by floating charges.
Examples include certain employee wage claims and pension-related liabilities.
Since 1 December 2020, some debts owed to HM Revenue and Customs regained preferential status.
The purpose of preferential debt rules is to protect particular categories of vulnerable creditors.
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