Insolvency Act 1986 s.324 – Distribution by means of dividend

(1)Whenever the trustee has sufficient funds in hand for the purpose he shall, subject to the retention of such sums as may be necessary for the expenses of the bankruptcy, declare and distribute dividends among the creditors in respect of the bankruptcy debts which they have respectively proved.

(2)The trustee shall give notice of his intention to declare and distribute a dividend.

(3)Where the trustee has declared a dividend, he shall give notice of the dividend and of how it is proposed to distribute it; and a notice given under this subsection shall contain the prescribed particulars of the bankrupt’s estate.

(4)In the calculation and distribution of a dividend the trustee shall make provision—

(a)for any bankruptcy debts which appear to him to be due to persons who, by reason of the distance of their place of residence, may not have had sufficient time to tender and establish their proofs,

(b)for any bankruptcy debts which are the subject of claims which have not yet been determined, and

(c)for disputed proofs and claims.

Definitions used in section 324 1

bankruptcy debt: (a) in relation to a bankrupt, means a person to whom any of the bankruptcy debts is owed (being, in the case of an amount falling within paragraph (c) of the definition in section 382(1) or “bankruptcy debt”, the person in respect of whom that amount is specified in the criminal bankruptcy order in question), and
Defined in s.383(1) · see it in the full Act

Cases considering section 324 3

Levy v Legal Services Commission

[2000] EWCA Civ 285 · 10 November 2000

Confirms that dividends are declared among creditors in respect of bankruptcy debts which they have proved. A creditor with a non-provable debt receives no distribution under the bankruptcy regime. (see paras [34]; [58])

The Official Receiver v Negus

[2011] EWHC 3719 (Ch) · 16 December 2011

Applies the priority of bankruptcy expenses by requiring distribution among creditors subject to retaining sums necessary for those expenses. This supports treating Official Receiver and Secretary of State fees as at least as important as unsecured debts for section 310 purposes (see paras [5], [11]).

JSC Bank of Moscow v Kekhman & Ors

[2015] EWHC 396 (Ch) · 20 February 2015

Requires dividends to be declared and distributed among creditors when the trustee has sufficient funds. The provision was cited in describing the theoretical equal-distribution consequences of bankruptcy. (see paras [80], [128])

What each judgment says about section 324 is in the case-law panel in the full Act.

Amendments and notes

1 notes from legislation.gov.uk

Modifications

C1052S. 324 applied with modifications by S.I. 1986/1999, art. 3, Sch. 1 Pt. II