Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Prescribed part definition

What does Prescribed part mean? An amount ring‑fenced from assets subject to floating charges and reserved for unsecured creditors in corporate insolvency practice. In England & Wales and Scotland this is a statutory concept under Insolvency Act 1986, s 176A, with the calculation set by the Prescribed Part Order 2003 (as amended). The administrator or liquidator sets aside a share of the “net property” subject to floating charges and distributes it pari passu to unsecured creditors. Key features: - Applies where there is a floating charge created on or after 15 September 2003. - Calculated as 50% of the first £10,000 of net property and 20% of the...

Prescribed part under section 176A Insolvency Act 1986: scope, participation, calculation (£800k/£600k caps), and disapplication

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

What is the prescribed part? When does the prescribed part apply?

When an insolvency office-holder is appointed, their principal duty is to gather and realise the company’s assets so they can be shared among creditors and shareholders in accordance with the statutory order of distribution, often called the waterfall of payments. See: Order of payments—overview.

The prescribed part was brought in by the Enterprise Act 2002 as part of wide-ranging reforms to the corporate insolvency framework, inserting a new section 176A into the Insolvency Act 1986.

IA 1986, s 176A applies where a company has granted a floating charge on or after 15 September 2003 and then enters one of these procedures:

liquidation
administration
provisional liquidation
receivership

In such cases, the office-holder must set aside a portion (the ‘prescribed part’) of the company’s net property to satisfy unsecured creditors and must not pay that portion to the floating charge holder, except to the extent that it exceeds what is needed to meet unsecured debts.

For these purposes, a company’s net property is the amount of its property...

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Web page updated on 21/05/2026

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