Prescribed Part (Banking & Finance) meaning

In corporate insolvency practice, the prescribed part is the statutory slice of a company’s assets subject to a floating charge that is ring‑fenced for unsecured creditors before any distribution to the floating charge holder. It is defined in legislation: Insolvency Act 1986, s176A, and the Insolvency Act 1986 (Prescribed Part) Order 2003 (as amended). It is calculated from the company’s “net property” (broadly, the realisations from assets subject to the floating charge after prior claims and costs), at 50% of the first £10,000 and 20% of the balance, subject to a statutory cap (currently up to £800,000 in most post‑April 2020 cases, with transitional rules). The fund is only applied to the extent needed to satisfy unsecured debts; any surplus reverts to the floating charge holder. Fixed charge holders are unaffected. The court may order that the prescribed part need not be set aside where the cost of making a distribution would be disproportionate. The prescribed part typically arises in administrations and liquidations and is a key consideration for insolvency practitioners, floating charge lenders and unsecured creditors. The regime applies in England & Wales and Scotland; Northern Ireland has substantially similar provisions. The Republic of Ireland has no direct statutory equivalent, though...