Insolvency Act 1986, section 325

Claims by unsatisfied creditors

Part IX Bankruptcy

(1)A creditor who has not proved his debt before the declaration of any dividend is not entitled to disturb, by reason that he has not participated in it, the distribution of that dividend or any other dividend declared before his debt was proved, but—

(a)when he has proved that debt he is entitled to be paid, out of any money for the time being available for the payment of any further dividend, any dividend or dividends which he has failed to receive; and

(b)any dividend or dividends payable under paragraph (a) shall be paid before that money is applied to the payment of any such further dividend.

(2)No action lies against the trustee for a dividend,but if the trustee refuses to pay a dividend the court may, if it thinks fit, order him to pay it and also to pay, out of his own money—

(a)M22interest on the dividend, at the rate for the time being specified in section 17 of the JudgmentsAct 1838, from the time it was withheld, and

(b)the costs of the proceedings in which the order to pay is made.

Cases considering section 325 3

Whitehead v Household Mortgage Corpn plc

[2002] EWCA Civ 1657 · 14 November 2002

Used in the bankruptcy analogy to show that later realisation of security does not disturb a dividend already paid.

Edward Thomas & Ors v PJSC National Bank Trust

[2025] EWHC 75 (Ch) · 23 January 2025

The judgment refers to section 325(2) when observing that no claim lies against a trustee for a dividend, while identifying the bankruptcy order as the latest source of the obligation relevant to regulation 58(5). (see para [51])

Oraki & Anor v Bramston & Anor

[2015] EWHC 2046 (Ch) · 15 July 2015

Cited as part of the statutory regime of remedies and procedures governing challenges to bankruptcy administration. It supported the conclusion that a general common-law duty was unnecessary (see para [33]).

What each judgment says about section 325 is in the case-law panel in the full Act.

Amendments and notes

2 notes from legislation.gov.uk

Modifications

  1. C1053s. 325 applied with modifications by S.I. 1986/1999, art. 3, Sch. 1 Pt. II

Marginal citations

  1. M221838 c. 110.