Owed money from a bankrupt or a company in liquidation

Secured creditors are the first to get paid when a debtor's assets are realised - sold or disposed of to raise money. For example, a creditor who holds a fixed charge - a security interest taken to protect against non-payment of debt - or security on an asset such as a mortgage has the right to sell the asset to recover their debt. Any surplus money is then handed over to the trustee/liquidator.

After the secured debts have been repaid, the trustee/liquidator distributes the remaining proceeds to pay the following - in strict order of priority:

• Liquidation/bankruptcy fees and charges - this does not include court fees.
• Debts due to preferential creditors - those entitled to certain payments in priority over other unsecured creditors - including wages owed in the four months before the date of the insolvency order, as well as all holiday pay and contributions to occupational pension schemes.
• In company cases, any creditor holding a floating charge over an asset, such as a debenture. This is where a class of goods or assets - eg the debtor's stock - are named as security for a debt.
• All unsecured creditors.
• Any interest payable on debts.
• The shareholders in company cases.

If full repayment of unsecured claims isn't possible, the money available is divided between creditors in proportion to the value of each claim.

How much you are paid will depend on the amount of money that can be realised and the number of claims. If there are few assets, you may not get anything.

If you wish to see a full list of creditors showing how much each is owed, you can ask the official receiver (OR)/insolvency practitioner (IP) for this. The OR/IP is allowed to charge a fee for this service. Alternatively, you have a right to view the court file - unless the court directs otherwise.

If a statement of affairs has been submitted, the OR/IP will direct you to the court file. A statement of affairs is a document completed by a bankrupt, company officer, or director(s) stating the assets and giving details of all debts and creditors.

When paying a dividend, the OR/IP can reject the whole or part of a creditor's claim but must give reasons for doing so in writing. If you are dissatisfied with the decision on your claim, you can apply to the court in which the bankruptcy or winding-up order was made for it to be reversed or varied.