Jamil Mustafa
Barrister at South Square specialising in insolvency and restructuring and commercial law. Called to the Bar of England and Wales in 2018.
Practice Area
Panel
- Contributing Author
1 Contributions by Jamil Mustafa
PRACTICE NOTES
Administration expenses: priority waterfall, moratorium super-priority, salvage principle, and creditor challenge rights (England and Wales)
This Practice Note
This Practice Note outlines what qualifies as an administration expense and highlights leading case law. In an administration, such expenses are paid out of the company’s assets in administration in a defined order:
after fixed charge creditors
but before preferential creditors, floating charge holders and unsecured creditors
This sequence of priorities (the ‘waterfall’) was modified by the Corporate Insolvency and Governance Act (CIGA 2020) where the administration is preceded by a moratorium under Part A1 of the Insolvency Act 1986 (IA 1986). Various types of expense are identified by IA 1986 and the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024. The IR 2016, SI 2016/1024 also set out, with specificity, the payment priority to be applied to the different categories of expense. Consequently, a creditor seeking to improve their position must not only demonstrate that their claim constitutes an expense of the administration, but also determine the precise category into which that expense falls, in order to secure the highest possible place in the priority order. It is therefore crucial for creditors to evidence both expense status and the correct categorisation to maximise their standing...
Restructuring & Insolvency
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