Companies Act 2014 section 1428A

Priority of payments in a winding up

Section 1428A establishes the order in which different categories of creditor are paid when a bank, building society, credit union, or other financial institution covered by the Bank Recovery and Resolution Regulations is wound up.

• Eligible deposits up to the guaranteed coverage level (currently €100,000) and any deposit guarantee scheme stepping into depositors' shoes rank first among unsecured claims, on an equal footing with the preferential debts listed in section 621(2) of the Act.
• Deposits from individuals and micro, small and medium-sized enterprises that exceed the guaranteed coverage level — together with deposits that would qualify but were made through non-EU branches — rank next, ahead of ordinary unsecured creditors but behind the first category.
• Ordinary unsecured creditors are then paid, but ahead of holders of specified subordinated debt instruments — those with an original maturity of at least one year, no embedded derivatives, and documentation that expressly states their lower ranking.
• At the bottom of the priority ladder sit claims arising from own-funds instruments (such as Common Equity Tier 1, Additional Tier 1, and Tier 2 capital), which are paid only after all other unsecured claims, including the subordinated debt instruments, have been addressed.

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