Creditor dividend estimator
When an insolvent company is wound up, its money is paid out in an order fixed by the Insolvency Act 1986: fixed-charge lenders from their own assets, then the costs, then employees and some HMRC debts, then a ring-fenced "prescribed part" for unsecured creditors, then the floating-charge lender, then everyone else. That is why unsecured creditors can end up with a few pence in the pound, or nothing. Enter the company's assets and what it owes each class below to see where the money runs out and roughly what each class gets back.
Estimate the dividend for each class of creditor
Use estimated realisable values (what the assets would actually sell for in an insolvency, after the cost of selling them), not book values. A statement of affairs or an estimated outcome statement from an insolvency practitioner has these figures.
The secured lender recovers £101,400 of the £120,000 it is owed, a shortfall of £18,600. If you personally guaranteed that lending, this shortfall is roughly what the lender could look to you for, up to the limit of the guarantee.
The full breakdown by class is in the worked example below.
Worked example: the starting figures are illustrative, not typical of any real case. Replace them with your own. How it works: fixed-charge assets pay the fixed-charge holder first and any surplus joins the other assets; costs come off next, then ordinary and secondary preferential claims in turn; if there is a floating charge, the prescribed part is taken from what is left (the net property) for unsecured creditors, the floating-charge holder takes the rest up to its debt, and anything over goes to unsecured creditors and then shareholders. It follows the rules for a liquidation in England and Wales, assumes every claim is admitted at the figure you enter, assumes the floating charge covers all assets not under a fixed charge, and applies the prescribed part even where the office holder could choose not to (net property under £10,000). It ignores statutory interest, set-off, retention of title, moratorium debts (section 174A) and challenges to a charge, any of which can change the answer.
Sources: IA 1986 s175, s176A, s176ZA, Schedule 6, Prescribed Part Order 2003, SI 2020/211, Monetary Limits Order 1986, checked 23 September 2026.
Worked example in full
The calculator's starting figures: a bank holds a debenture (a fixed charge and a floating charge) and is owed £120,000. The assets under its fixed charge realise £50,000 and everything else realises £150,000. The liquidator's fees and expenses are £30,000, employees are owed £12,000 of preferential wages and holiday pay, HMRC is owed £40,000 of VAT and PAYE, and unsecured creditors are owed £250,000. The floating charge was created after 6 April 2020.
| Step | Owed | Paid | What happens |
|---|---|---|---|
| 1. Bank, from the fixed-charge assets | £120,000 | £50,000 | Takes all £50,000; the £70,000 still owed moves under its floating charge |
| 2. Liquidator's fees and expenses | £30,000 | £30,000 | Paid in full from the £150,000 of other assets |
| 3. Ordinary preferential (employees) | £12,000 | £12,000 | 100p in the £ |
| 4. Secondary preferential (HMRC: VAT, PAYE, employee NIC) | £40,000 | £40,000 | 100p in the £ |
| 5. Prescribed part for unsecured creditors | £16,600 | 50% of the first £10,000 of the £68,000 net property, plus 20% of the other £58,000 | |
| 6. Bank, under its floating charge | £70,000 | £51,400 | Takes the rest; £18,600 is never repaid |
| 7. Unsecured creditors | £250,000 | £16,600 | 6.6p in the £, all of it from the prescribed part |
| 8. Shareholders | £0 | Nothing left |
The bank gets 84.5p in the pound overall and unsecured creditors get 6.6p. Without the prescribed part, the bank would have taken the whole £68,000 of net property (it was still owed more than that) and unsecured creditors would have received nothing. A supplier owed £10,000 in this example would receive £664.
The order of payment, and the law behind each step
| Class | What it covers | Where the rule is |
|---|---|---|
| Fixed-charge holder | Paid from the asset its charge is fixed on, before anyone else touches it. A shortfall is claimed under any floating charge the same lender holds, otherwise as an unsecured debt. | The charge document; Companies House register |
| Expenses of the insolvency | The office holder's fees and expenses come out of assets not subject to a fixed charge, ahead of every class below. | IA 1986 s115 (CVL), s176ZA (floating-charge assets) |
| Ordinary preferential | Employees' wages for the 4 months before the relevant date up to £800 each, accrued holiday pay, and certain pension contributions. They share equally and abate proportionally if the money runs short. | IA 1986 s175(1A), s386, Sch 6 paras 8 to 10 |
| Secondary preferential | HMRC for VAT and for tax the company deducted from others: PAYE income tax, employee National Insurance, CIS deductions and student loan repayments. Only where the relevant date is on or after 1 December 2020. | IA 1986 s175(1B), Sch 6 para 15D; SI 2020/983 |
| Prescribed part | A slice of the net property that would otherwise go to the floating-charge holder, ring-fenced for unsecured creditors. | IA 1986 s176A; SI 2003/2097; SI 2020/211 |
| Floating-charge holder | Whatever is left of the net property after the prescribed part, up to what it is owed. | IA 1986 s175(2)(b) |
| Unsecured creditors | Trade suppliers, landlords, HMRC for Corporation Tax and employer NIC, employees for anything above the preferential limits. All share pari passu, the same pence in the pound. | IA 1986 s107 (voluntary winding up) |
| Shareholders | Only after every proved debt is paid in full, and after statutory interest on those debts. | IA 1986 s107, s189 |
Within each class, creditors rank equally: if there is not enough to pay a class in full, everyone in it takes the same reduced rate. A class further down gets nothing until the class above is paid in full, which is why a large HMRC VAT debt can wipe out what unsecured suppliers would otherwise have received. The fixed and floating charges guide explains how the charges themselves work.
The prescribed part at different levels of net property
Calculated from the formula in article 3 of the Prescribed Part Order 2003: 50% of the first £10,000 and 20% of the rest. The cap of £800,000 is reached at net property of £3,985,000; the older £600,000 cap at £2,985,000.
| Net property | Charge created on or after 6 Apr 2020 (cap £800,000) | Charge created before 6 Apr 2020 (cap £600,000) |
|---|---|---|
| £5,000 | £2,500 | £2,500 |
| £10,000 | £5,000 | £5,000 |
| £50,000 | £13,000 | £13,000 |
| £100,000 | £23,000 | £23,000 |
| £250,000 | £53,000 | £53,000 |
| £500,000 | £103,000 | £103,000 |
| £1,000,000 | £203,000 | £203,000 |
| £2,985,000 | £600,000 | £600,000 |
| £3,985,000 | £800,000 | £600,000 |
| £5,000,000 | £800,000 | £600,000 |
Net property is what would go to the floating-charge holder but for the prescribed part: the assets not under a fixed charge (plus any fixed-charge surplus), less the costs and preferential claims. With no floating charge there is no prescribed part, because everything after the preferential creditors already goes to unsecured creditors.
Where the figures come from
Directors usually have the liabilities side already: the creditor list template sorts them by class, and the statement of affairs worksheet adds the assets at book and estimated realisable value. The costs figure should come from a practitioner's written quote; the liquidation cost calculator and administration cost calculator help you check one. Charges on the company are listed free on the Companies House register, with their creation dates.
Two figures move the answer most. Realisable values can be well below book value once a business stops trading, especially for stock, work in progress and debtors. And the size of the HMRC VAT and PAYE debt matters, because since December 2020 it is paid ahead of the floating-charge lender and the prescribed part.
Why a director should look at this
If you gave a personal guarantee to the secured lender, its shortfall after the waterfall is what it can look to you for; our personal guarantee exposure checker adds up everything you have signed. If you are owed money by the company on your director's loan account, you are normally an unsecured creditor like any supplier. And if the estimate shows unsecured creditors getting nothing either way, that is worth knowing before choosing between a creditors' voluntary liquidation and administration, because the cost of each comes straight off the top.
Common questions
What does pence in the pound mean?
It is the share of a debt a creditor gets back. If unsecured creditors are owed £250,000 in total and £16,600 is available for them, each receives about 6.6p for every £1 they are owed, so a supplier owed £10,000 gets £664. Creditors in the same class always get the same rate; that is what pari passu means.
Who gets paid first in a liquidation?
A fixed-charge holder from its own asset, then the costs of the liquidation, then ordinary preferential creditors (mainly employees), then HMRC as a secondary preferential creditor for VAT and PAYE-type deductions, then the prescribed part is set aside for unsecured creditors, then the floating-charge holder, then unsecured creditors, then shareholders. The table on this page sets out each step and the section of the Insolvency Act behind it.
How is the prescribed part calculated?
Take the net property, meaning what would be left for the floating-charge holder after costs and preferential creditors. The prescribed part is 50% of the first £10,000 plus 20% of the rest, capped at £800,000, or £600,000 where the money goes to a floating charge created before 6 April 2020 (Insolvency Act 1986 (Prescribed Part) Order 2003, as amended in 2020). There is no prescribed part at all if there is no floating charge, or the charge was created before 15 September 2003.
Can the prescribed part be skipped?
Yes, in three cases under section 176A. The office holder can decide not to make it available if net property is under £10,000 and the cost of paying unsecured creditors would be disproportionate to the benefit; the court can disapply it on the same ground whatever the size of the fund, on the office holder's application; and a CVA or a Part 26 or 26A arrangement can disapply it.
Can the floating-charge holder share in the prescribed part for its own shortfall?
Section 176A(2)(b) says the office holder must not distribute the prescribed part to the floating-charge holder except so far as it exceeds what is needed to pay unsecured debts. This estimator applies that literally: the lender's shortfall does not take a share of the ring-fenced fund, and any part of the fund unsecured creditors do not need goes back to the lender.
Are employees paid in full?
Only up to the preferential limits: arrears of pay for the 4 months before the relevant date up to £800 per employee, plus accrued holiday pay, rank as ordinary preferential debts. Anything above that, and redundancy and notice pay, is an unsecured claim. Employees can often claim some of these amounts from the Redundancy Payments Service instead; see our employee redundancy calculator.
Is it the same in an administration?
The order is the same: paragraph 65 of Schedule B1 applies section 175 to an administrator's distributions. The difference is that an administrator needs the court's permission to pay unsecured creditors anything beyond the prescribed part. Where the administrator expects a distribution to unsecured creditors beyond the prescribed part, the company can move from administration into a creditors' voluntary liquidation (paragraph 83), and the liquidator then pays it.
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