Part IV

Winding Up of Companies Registered under the Companies Acts
Chapter VIII

Provisions of General Application in Winding Up

Moratorium: order of priority of payment of debts

Moratorium debts etc: priority
174A
1
This section applies where proceedings for the winding up of a company are begun before the end of the period of 12 weeks beginning with the day after the end of any moratorium for the company under Part A1.
2
In the winding up, the following are payable out of the company’s assets (in the order of priority shown) in preference to all other claims—
a
any prescribed fees or expenses of the official receiver acting in any capacity in relation to the company;
b
moratorium debts and priority pre-moratorium debts.
3
In subsection (2)(b) “priority pre-moratorium debt” means—
a
any pre-moratorium debt that is payable in respect of—
i
the monitor’s remuneration or expenses,
ii
goods or services supplied during the moratorium,
iii
rent in respect of a period during the moratorium, or
iv
wages or salary arising under a contract of employment, so far as relating to a period of employment before or during the moratorium,
b
any pre-moratorium debt that—
i
consists of a liability to make a redundancy payment, and
ii
fell due before or during the moratorium, and
c
any pre-moratorium debt that—
i
arises under a contract or other instrument involving financial services,
ii
fell due before or during the moratorium, and
iii
is not relevant accelerated debt (see subsection (4)).
4
For the purposes of subsection (3)(c)—
- “relevant accelerated debt” means any pre-moratorium debt that fell due during the relevant period by reason of the operation of, or the exercise of rights under, an acceleration or early termination clause in a contract or other instrument involving financial services;
- “the relevant period” means the period—
  1. beginning with the day on which the statement under section A6(1)(e) is made, and
  2. ending with the last day of the moratorium.
5
The rules may make provision as to the order in which the debts mentioned in subsection (2)(b) rank among themselves in a case where the assets of the company are insufficient to meet them in full.
6
The Secretary of State may by regulations made by statutory instrument amend this section for the purposes of changing the definition of “moratorium debt” or “priority pre-moratorium debt” in this section.
7
Regulations under subsection (6) may make consequential, supplementary, incidental or transitional provision or savings.
8
A statutory instrument containing regulations under subsection (6) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.
9
For the purposes of this section proceedings for the winding up of a company are begun when—
a
a winding-up petition is presented, or
b
a resolution for voluntary winding up is passed.
10
Any rules made under section A18(4) (meaning of supply of goods or services) apply also for the purposes of subsection (3)(a)(ii) of this section.
11
In this section—
- “acceleration or early termination clause”, in relation to a contract or other instrument involving financial services, means a provision of the contract or other instrument—
  1. under which, on the happening of an event—
    1. a debt or other liability falls due earlier than it otherwise would, or
    2. a debt or other liability is terminated and replaced by another debt or liability, or
  2. which confers on a party a right which, if exercised, will result in —
    1. a debt or other liability falling due earlier than it otherwise would, or
    2. a debt or other liability being terminated and replaced by another debt or liability;
- “contract or other instrument involving financial services” has the same meaning as it has for the purposes of section A18 (see Schedule ZA2);
- “monitor’s remuneration or expenses” has the meaning given by section A18;
- “moratorium debt” has the meaning given by section A53;
- “pre-moratorium debt” has the meaning given by section A53;
- “redundancy payment” has the meaning given by section A18;
- “wages or salary” has the meaning given by section A18.
Pt. 4 (ss. 73-219) modified by Company Directors Disqualification Act 1986 (c. 46, SIF 27), ss. 21(2), 25
Pt. 4 modified by Criminal Justice (Scotland) Act 1987 (c. 41, SIF 39:1), ss. 30(6), 35(4), 47(4)(a)
Pt. 4 modified by Criminal Justice Act 1988 (c. 33, SIF 39:1), ss. 86(5), 123, Sch. 8 para. 16
Pt. 4 modified (1.2.1993) by Friendly Societies Act 1992 (c. 40), s. 23, Sch. 10 para. 1(a) (with ss. 7(5), 93(4)); S.I. 1993/16, art. 2, Sch.3 (as amended (13.3.2018) by S.I. 2018/208, regs. 1(3), 3)
Pt. 4 modified (E.W.S.) (31.3.1996) by 1995 c. 20, s. 110(1), Sch. 4 para. 3(4); S.I. 1996/517, art. 3(2) (subject to transitional provisions and savings in arts. 4-6, Sch. 2) (which modifying Act was itself repealed (1.4.1996) by 1995 c. 40, ss. 6(1), 7(2), Sch. 5 (with Sch. 3, paras. 3, 16))
Pt. 4 modified (1.4.1996) by 1995 c. 43, ss. 44, 50(2), Sch. 2 para. 3(4)
Pt. 4 modified (24.3.2003) by 2002 c. 29, ss. 426(8), 458(1)(3); S.I. 2003/333, art. 2, Sch. (subject to arts. 3-13 (as amended by S.I. 2003/531, arts. 3, 4))
Pt. 4 (ss. 73-219) extended (with modifications) by Building Societies Act 1986 (1986 c. 53), ss. 54(3)(a)(5)(a), 90, 126(3), Sch. 15 (as amended (13.3.2018) by S.I. 2018/208, regs. 1(3), 2(2))
Pts. 1-7 (ss. 1-251) applied (with modifications) by S.I. 1989/1276, arts. 2, 3
Pt. 4 (ss. 73-219) applied (with modifications) (1.2.1993) by Friendly Societies Act 1992 (c. 40), ss. 21(1), 22, 23, Sch. 10 para. 1(a) (with ss. 7(5), 93(4)); S.I. 1993/16, art. 2, Sch. 3
Pt. 4 applied (with modifications) (1.12.1994) by S.I. 1994/2421, art. 8(4)(5)(8)(9) (as amended (1.7.2005) by S.I. 2005/1516, art. 4)
Pt. 4 applied (1.12.1994) by S.I. 1994/2421, art. 10(2)(3)(6), Sch. 4 Pt. II, Sch. 7 (as amended (1.7.2005) by S.I. 2005/1516, art. 5)
Pt. 4: power to apply or incorporate conferred (6.4.2001) by 2000 c. 12, s. 14(1); S.I. 2000/3316, art. 2
Pt. 4: power to apply (with modifications) conferred (20.11.2003) by Health and Social Care (Community Health and Standards) Act 2003 (c. 43), ss. 25(6), 26
Pt. 4: power to apply (with modifications) conferred (E.W.) (1.3.2007) by National Health Service Act 2006 (c. 41), ss. 54(8), 55, 277
First Group of Parts (Pts. 1-7) applied (with modifications) (15.12.2006) by The Banks (Former Authorised Institutions) (Insolvency) Order 2006 (S.I. 2006/3107), art. 3, Sch. (as amended (1.4.2013) by S.I. 2013/472, art. 1(1), Sch. 2 para. 117; and (13.3.2018) by S.I. 2018/208, regs. 1(3), 11
Pt. 4 amended (1.12.2001) by 2000 c. 8, s. 371(2)(b); S.I. 2001/3538, art. 2(1)
Pt. 4 (except s. 185) modified (S.) (prosp.) by Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), ss. 45(5), 227(3) (subject to s. 45(1) and with ss. 45(6), 223)
Pt. 4 applied (1.12.1994) by S.I. 1994/2421, art. 10(2)(3)(6), Sch. 4 Pt. II, Sch. 7 (as amended (1.7.2005) by S.I. 2005/1516, art. 5 and (1.1.2015) by S.I. 2014/3486, arts. 1(2), 14 (with art. 3))
Pt. 4 applied (with modifications) (S.) by S.S.I. 2001/128, reg. 4, Schs. 2, 3) (as modified) (temp.) (retrospective to 27.4.2020) by Corporate Insolvency and Governance Act 2020 (c. 12), Sch. 10 paras. 8(1)(2), 14 (with ss. 2(2), 5(2))
Pt. 4 modified (26.6.2020) by Corporate Insolvency and Governance Act 2020 (c. 12), ss. 12, 49(1) (with ss. 2(2), 5(2))
S. 174A and cross-heading inserted (26.6.2020) by Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 3 para. 13 (with ss. 2(2), 5(2))
Pts. 1-4 applied (with modifications) in part (E.W.) (2.1.2013) by The Charitable Incorporated Organisations (Insolvency and Dissolution) Regulations 2012 (S.I. 2012/3013), reg. 1, Sch. para. 1 (as amended (26.6.2020) by Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 3 para. 49(3) (with ss. 2(2), 5(2)); (7.7.2020) by S.I. 2020/710, regs. 1, 4 (with reg. 6) (which affecting legislation is revoked and this amendment reversed (13.8.2020) by S.I. 2020/856, regs. 1(2), 2); and (13.8.2020 immediately after the coming into force of S.I. 2020/856, reg. 2) by S.I. 2020/856, regs. 1(3), 5 (with reg. 7))
Pts. 1-4, 6, 7 applied to limited liability partnerships (with modifications) (E.W.S.) (6.4.2001) by S.I. 2001/1090, reg. 5, Schs. 3, 4 (as amended (4.3.2004) by S.I. 2004/355, art. 10; (1.10.2005) by S.I. 2005/1989, reg. 3, Sch. 2 (with reg. 4); (8.12.2017) by S.I. 2017/1119, reg. 1(1), Sch. 1 Pts. 2, 3; (temp.) (retrospective to 27.4.2020) by Corporate Insolvency and Governance Act 2020 (c. 12), Sch. 10 paras. 8(1)(2), 14, Sch. 12 para. 6 (with ss. 2(2), 5(2); (26.6.2020) by S.I. 2020/643, reg. 1(1), Sch. 1 (with reg. 2); (26.6.2020) by Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 12 para. 6 (with ss. 2(2), 5(2), 14(4)); and (16.2.2021) by S.I. 2021/60, reg. 1(1), Sch. 1 (with reg. 3(2)))
Pts. 1-4 applied (with modifications) (8.7.2021) by The Payment and Electronic Money Institution Insolvency Regulations 2021 (S.I. 2021/716), reg. 2, Sch. 1 para. 3 (with reg. 5) (as amended (4.1.2024) by S.I. 2023/1399, regs. 1(2), 4)