PART 10

Claims, dividends and distribution etc.

Distribution

Priority in distribution
129
1
The funds of the debtor's estate must be distributed by the trustee in the sequestration to meet the following debts in the order in which they are mentioned—
a
the outlays and remuneration of an interim trustee in the administration of the debtor's estate,
b
the outlays and remuneration of the trustee in the sequestration in the administration of the debtor's estate,
c
where the debtor has died—
i
deathbed and funeral expenses reasonably incurred, and
ii
expenses reasonably incurred in administering the deceased's estate,
d
the expenses reasonably incurred by a creditor who is a petitioner for, or concurs in a debtor application for, sequestration,
e
ordinary preferred debts (excluding any interest which has accrued on those debts to the date of sequestration),
f
secondary preferred debts (excluding any interest which has accrued on those debts to the date of sequestration),
g
ordinary non-preferential debts (that is to say, debts which are neither secured debts nor debts mentioned in any other paragraph of this subsection),
ga
secondary non-preferential debts,
gb
tertiary non-preferential debts,
h
interest, between the date of sequestration and the date of payment of the debt, at the rate specified in subsection (10) on—
i
the ordinary preferred debts,
ii
the secondary preferred debts, ...
iii
the ordinary non-preferential debts,
iv
the secondary non-preferential debts, and
v
the tertiary non-preferential debts.
i
any postponed debt.
2
In this Act—
- “preferred debt” means a debt listed in Part 1 of schedule 3 of this Act,
- “ordinary preferred debt” means a debt within any of paragraphs 1 to 6 of that Part, and
- “secondary preferred debt” means a debt within any of paragraphs 7 to 8A of that Part.
3
Part 2 of that schedule has effect for the interpretation of Part 1 of that schedule.
3A
In subsection (1), “secondary non-preferential debts” and “tertiary non-preferential debts” have the meanings given by section 129A.
4
In this Act, “postponed debt” means—
a
a loan made to the debtor, in consideration of a share of the profits in the debtor's business, which is postponed under section 3 of the Partnership Act 1890 to the claims of other creditors,
b
a loan made to the debtor by the debtor's spouse or civil partner, or
c
a creditor's right to—
i
anything vesting in the trustee by virtue of a successful challenge under section 98, or
ii
the proceeds of sale of anything so vesting.
5
A debt falling within any of paragraphs (c) to (i) of subsection (1) has the same priority as any other debt falling within the same paragraph and, where the funds of the estate are inadequate to enable the debts mentioned in the paragraph in question to be paid in full, those debts are to abate in equal proportions.
6
Any surplus remaining after all the debts mentioned in this section have been paid in full must be made over to the debtor or the debtor's successors or assignees.
7
In subsection (6), “surplus”—
a
includes any kind of estate, but
b
does not include any unclaimed dividend.
8
Subsection (6) is subject to Article 49 of the EU insolvency proceedings regulation (which provides that any surplus in secondary proceedings is to be transferred to main proceedings).
9
Nothing in this section affects—
a
any right of a secured creditor which is preferable to the rights of the trustee,
b
any preference of the holder of a lien over a title deed, or other document, which has been delivered to the trustee in accordance with a requirement under section 108(5).
10
The rate of interest referred to in paragraph (h) of subsection (1) is whichever is the greater of—
a
the prescribed rate at the date of sequestration, and
b
the rate applicable to that debt apart from the sequestration.
S. 129 in force at 30.11.2016 by S.S.I. 2016/294, reg. 2
Words in s. 129(8) substituted (26.6.2017) by The Insolvency (Regulation (EU) 2015/848) (Miscellaneous Amendments) (Scotland) Regulations 2017 (S.S.I. 2017/210), regs. 1, 4(11) (with reg. 9)
Word in s. 129(1)(g) inserted (19.12.2018) by The Banks and Building Societies (Priorities on Insolvency) Order 2018 (S.I. 2018/1244), arts. 1(2), 43(2)(a) (with art. 3)
S. 129(1)(ga)(gb) inserted (19.12.2018) by The Banks and Building Societies (Priorities on Insolvency) Order 2018 (S.I. 2018/1244), arts. 1(2), 43(2)(b) (with art. 3)
Word in s. 129(1)(h) omitted (19.12.2018) by virtue of The Banks and Building Societies (Priorities on Insolvency) Order 2018 (S.I. 2018/1244), arts. 1(2), 43(2)(c)(i) (with art. 3)
Word in s. 129(1)(h)(iii) inserted (19.12.2018) by The Banks and Building Societies (Priorities on Insolvency) Order 2018 (S.I. 2018/1244), arts. 1(2), 43(2)(c)(ii) (with art. 3)
S. 129(1)(h)(iv)(v) inserted (19.12.2018) by The Banks and Building Societies (Priorities on Insolvency) Order 2018 (S.I. 2018/1244), arts. 1(2), 43(2)(c)(iii) (with art. 3)
S. 129(3A) inserted (19.12.2018) by The Banks and Building Societies (Priorities on Insolvency) Order 2018 (S.I. 2018/1244), arts. 1(2), 43(3) (with art. 3)
Words in s. 129(2) substituted (with application in accordance with s. 98(7) of the amending Act) by Finance Act 2020 (c. 14), s. 98(3)