Companies Act 2014 section 440

Preferential payments when receiver is appointed under floating charge

Section 440 deals with the priority of certain debt payments when a receiver is appointed over company property secured by a floating charge, ensuring that preferential creditors are paid ahead of the debenture holders.

• Where a receiver is appointed under a floating charge (and the company is not already being wound up), preferential debts must be paid out of the assets coming into the receiver's hands before any claims by debenture holders for principal or interest are settled.
• The rules on accrued holiday remuneration that normally apply on a winding up are adapted so that they apply by reference to the date the receiver is appointed or possession is taken, rather than the date of a winding-up order or resolution.
• All relevant time periods specified in Part 11 of the Act for preferential payments are calculated from the date of the receiver's appointment or the date possession is taken.
• Any preferential payments made by the receiver under this section are to be recouped, so far as possible, from the company's assets that are available for the payment of general (i.e. non-preferential, unsecured) creditors.

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