A prescribed part is the part of the proceeds from realising the assets covered by a floating charge, that is set aside and kept available, so it can satisfy any unsecured debts. This is a part of section 176A of the Insolvency Act 1986 and the Insolvency Act 1986 (Prescribed Part) Order 2003.
To calculate the prescribed part, you get a percentage of the value of the company’s property that is subject to a floating charge. Typically, 50% of the first £10,000 of net floating charge realisations plus 20% of anything after, subject to a maximum prescribed part of £600,000.
Prescribed parts can be disapplied if:
·The company’s net property is less than £10,000
·The insolvency practitioner thinks the cost of making a distribution would be disproportionate to the benefits
·The net property exceeds the minimum
·Court order disapplication.
For more information on prescribed parts, or if you are a worried creditor with a floating charge, contact us today on 0800 970 0539.