Prescribed Part
A portion of a company's net property that must be set aside for unsecured creditors, out of assets that would otherwise go entirely to a floating-charge holder, under s.176A Insolvency Act 1986.
Independent editorial summary — not the official statute text. Read the official version on legislation.gov.uk.
Where a floating charge relates to the property of a company in liquidation, administration, receivership, or with a provisional liquidator, s.176A(2) Insolvency Act 1986 requires that the liquidator, administrator or receiver 'shall make a prescribed part of the company's net property available for the satisfaction of unsecured debts', rather than allowing the whole of that property to be swept up by the floating-charge holder.
The same provision states that the office-holder 'shall not distribute that part to the proprietor of a floating charge except in so far as it exceeds the amount required for the satisfaction of unsecured debts', so the ring-fenced fund is reserved for unsecured creditors first. The duty to set aside a prescribed part does not apply where the company's net property is below a prescribed minimum and the office-holder considers the cost of distribution would be disproportionate to the benefit, or where it is disapplied by a company voluntary arrangement or scheme of arrangement.
Related terms
Official sources
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