Insolvency Act 1986, section 176A

Share of assets for unsecured creditors

Part IV Winding Up of Companies Registered under the Companies Acts

(1)This section applies where a floating charge relates to property of a company—

(a)which has gone into liquidation,

(b)which is in administration,

(c)of which there is a provisional liquidator, or

(d)of which there is a receiver.

(2)The liquidator, administrator or receiver—

(a)shall make a prescribed part of the company’s net property available for the satisfaction of unsecured debts, and

(b)shall not distribute that part to the proprietor of a floating charge except in so far as it exceeds the amount required for the satisfaction of unsecured debts.

(3)Subsection (2) shall not apply to a company if—

(a)the company’s net property is less than the prescribed minimum, and

(b)the liquidator, administrator or receiver thinks that the cost of making a distribution to unsecured creditors would be disproportionate to the benefits.

(4)Subsection (2) shall also not apply to a company if or in so far as it is disapplied by—

(a)a voluntary arrangement in respect of the company, or

(b)a compromise or arrangement agreed under [F388 Part 26 [F389 or 26AF389] of the Companies Act 2006 (arrangements and reconstructions)F388] .

(5)Subsection (2) shall also not apply to a company if—

(a)the liquidator, administrator or receiver applies to the court for an order under this subsection on the ground that the cost of making a distribution to unsecured creditors would be disproportionate to the benefits, and

(b)the court orders that subsection (2) shall not apply.

(6)In subsections (2) and (3) a company’s net property is the amount of its property which would, but for this section, be available for satisfaction of claims of holders of debentures secured by, or holders of, any floating charge created by the company.

(7)An order under subsection (2) prescribing part of a company’s net property may, in particular, provide for its calculation—

(a)as a percentage of the company’s net property, or

(b)as an aggregate of different percentages of different parts of the company’s net property.

(8)An order under this section—

(a)must be made by statutory instrument, and

(b)shall be subject to annulment pursuant to a resolution of either House of Parliament.

(9)In this section—

  • “floating charge” means a charge which is a floating charge on its creation and which is created after the first order under subsection (2)(a) comes into force, and

  • “prescribed” means prescribed by order by the Secretary of State.

(10)An order under this section may include transitional or incidental provision.F387]

Definitions used in section 176A 3

the company

2 Section 233B does not apply in relation to a contract for the supply of goods or services to a company (“the company”) where any of paragraphs 3 to 11 applies.

Defined in Sch.4ZZA para.2 · see it in the full Act
in administration

(a) a company is “in administration” while the appointment of an administrator of the company has effect,

Defined in Sch.B1 para.1(2) · see it in the full Act
administrator

1 (1) For the purposes of this Act “administrator” of a company means a person appointed under this Schedule to manage the company’s affairs, business and property.

Defined in Sch.B1 para.1(1) · see it in the full Act

Cases considering section 176A 22

Laurence Pagden & Anor v Craig Andrew Ridgley

[2025] EWHC 2674 (Ch) · 17 October 2025Limits

Creates the prescribed-part regime under which some floating-charge assets are made available to general creditors. The judgment treats this as a statutory modification that does not extend to fixed charges. (see paras [18], [49]) Supplies the statutory meaning of prescribed part used in the Rules. The judgment uses it to identify the floating-charge assets available for general creditors. (see para [49])

Orthios Eco Parks (Anglesey) Limited, Re

[2024] EWHC 3047 (Ch) · 28 November 2024Defines

Applies the prescribed-part regime to make a portion of net property available for unsecured creditors, including in an administration, while excluding fixed-charge property. (see para [39]) Identifies the prescribed-part route through which unsecured creditors may receive a distribution in administration. (see para [40]) Defines net property by reference to property otherwise available for floating-charge claims after relevant expenses and preferential debts. (see para [39])

Fitzroy Street Capital Inc & Anor v Lee Antony Manning & Anor

[2022] EWHC 1495 (Ch) · 20 June 2022

Applies the prescribed-part provisions as the relevant route for any distribution to unsecured creditors where no wider distribution was likely. The administrators were entitled to conclude that unsecured creditors would receive nothing beyond that route. (see paras [108], [230]-[239])

2 more judgments, and what each says about section 176A, are in the case-law panel in the full Act.

Amendments and notes

11 notes from legislation.gov.uk

Amendments

  1. F387S. 176A and preceding cross-heading inserted (15.9.2003) by 2002 c. 40, ss. 252, 279 (with s. 249(6)); S.I. 2003/2093, art. 2(1), Sch. 1 (subject to arts. 3-8 (as amended by S.I. 2002/2332, art. 2))
  2. F388Words in s. 176A(4)(b) substituted (6.4.2008) by The Companies Act 2006 (Consequential Amendments etc) Order 2008 (S.I. 2008/948), art. 3(1), Sch. 1 para. 103 (with arts. 6, 11, 12)
  3. F389Words in s. 176A(4)(b) inserted (26.6.2020) by Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 9 para. 6(3) (with ss. 2(2), 5(2))

Modifications

  1. C516S. 176A excluded (6.3.2008) by The Regulated Covered Bonds Regulations 2008 (S.I. 2008/346), reg. 46, Sch. para. 2(4)
  2. C517S. 176A excluded (26.12.2003) by The Financial Collateral Arrangements (No.2) Regulations 2003 (S.I. 2003/3226), reg. 10(3)
  3. C518S. 176A modified (18.2.2004) by The Insurers (Reorganisation and Winding Up) Regulations 2004 (S.I. 2004/353), reg. 21(7) (with reg. 3) (as modified (10.8.2005) by S.I. 2005/1998, regs. 2(3), 40(1)-(4))
  4. C519S. 176A applied (with modifications) (17.2.2009 for certain purposes, otherwise 21.2.2009) by Banking Act 2009 (c. 1), ss. 103, 263(1)(2) (with s. 247); S.I. 2009/296, arts. 2, 3, Sch. para. 2
  5. C520S. 176A applied (with modifications) (17.2.2009 for certain purposes, otherwise 21.2.2009) by Banking Act 2009 (c. 1), ss. 145, 263(1)(2) (with s. 247); S.I. 2009/296, arts. 2, 3, Sch. para. 3
  6. C521S. 176A applied by S.I. 1999/2979 reg. 14(5)(a)(i) (as substituted (1.10.2009) by The Financial Markets and Insolvency (Settlement Finality) (Amendment) Regulations 2009 (S.I. 2009/1972), reg. 4(d)(ii))
  7. C522S. 176A applied (with modifications) (6.4.2014) by The Industrial and Provident Societies and Credit Unions (Arrangements, Reconstructions and Administration) Order 2014 (S.I. 2014/229), arts. 1, 3
  8. C523S. 176A applied (with modifications) (E.W.S.) (8.7.2021) by The Payment and Electronic Money Institution Insolvency Regulations 2021 (S.I. 2021/716), regs. 2, 37 (with reg. 5) (as amended (4.1.2024) by S.I. 2023/1399, regs. 1(2), 4, 11)