Preferential dividend meaning

Proprietary claims Creditors frequently seek to secure proprietary claims, as these confer rights in rem (attaching to the asset itself) rather than personal rights (which bind only the individual). This distinction is especially significant when a company becomes insolvent: assets caught by a proprietary claim are excluded from the distressed company’s estate, allowing the claimant to recover in full, instead of proving as an unsecured creditor in the liquidation/administration and waiting for a dividend (which typically takes many months and is often under 50% — and occasionally almost nothing). In practice, proprietary claims jump ahead of secured and preferential creditors in the priority waterfall because the assets are ring-fenced for the benefit of the proprietary claimant. For payment waterfalls, see Practice Note: Waterfall of payments—a comparative guide...

This glossary sets out numerous expressions regularly encountered in the restructuring & insolvency sphere. Words shown in bold within definitions are themselves explained in other entries in this glossary as well. A Article X The MLIJ contains a single provision named Article X, aimed at jurisdictions that have already implemented the MLCBI, like England, or are weighing its adoption. Article X states: ‘Not withstanding any prior interpretation to the contrary, the relief available under [insert a cross-reference to the legislation of this State enacting Article 21 of the UNCITRAL Model Law on Cross-Border Insolvency] includes recognition and enforcement of a judgment’ (see Practice Note: UNCITRAL model law on recognition and enforcement of insolvency-related judgments (MLIJ): Article X). Asset-backed security (ABS) A form of security anchored by asset pools, for example loans, leases, and credit card receivables. Assimilated law From 1 January 2024, ‘retained law’ has been retitled ‘assimilated law’. The body of domestic law originally arising from EU obligations, created by the European...

Terminology Under the SIP code—the legislation that governs the terms and requirements of Share Incentive Plans (SIPs) and sets out the available tax reliefs—the expression ‘award of shares’ describes shares that are either allocated to employees or acquired on their behalf on a particular occasion. Accordingly, when multiple employees receive shares at the same time pursuant to the same invitation, each individual is regarded as having taken part in the same award of shares. As dividend shares are not, in strict terms, ‘awarded’, they are excluded from the meaning of an ‘award of shares’ in paragraph 5, Part 1 of Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003), and therefore the eligibility requirements do not extend to dividend shares. All-employee nature of the SIP It is a fundamental principle of a SIP that it is operated on an all-employee basis. This all-employee requirement is fundamental to how a SIP must run...