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What Rights Does a Creditor Have In Liquidation Or Bankruptcy?

Are creditors looking to claim assets or money from your company? There are a number of factors which determine what legal rights you have. In short, it depends on what category of creditor is trying to claim from your business. There are broadly three types;

  • Secured (they have rights over an asset such as a car or building)
  • Preferential (usually employees and limited to £800 each) (or)
  • Unsecured


As a creditor your number one objective should be to get your money back.

Secured creditors: they can collect the assets they are secured on – e.g. cars or plant and machinery and sell them. If you have supplied goods under a retention of title clause (called an ROT) and they are identifiable and still with the customer you should have the right to remove them. If you have distrained on goods under a Court judgment/as a landlord you will have special rights to those Assets as well.

Preferential creditors: this applies to the first £800 owed to employees and the rest of the claim will be unsecured (but may be paid direct by the Redundancy Payments Service).

Unsecured: no security or special rights at all. This includes H M Revenue and Customs. Once a company has gone into liquidation or a person into bankruptcy you should deal with the Insolvency Practitioner appointed who will help you make your claim.


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