Companies Act 2014 section 550

Payment by third person to creditor post period of protection — statutory subrogation in favour of third person in certain circumstances

Section 550 deals with what happens when a third party (such as a guarantor) pays a creditor after the company's examinership protection period has ended, and how that third party steps into the creditor's shoes under any compromise or scheme of arrangement.

• This section applies where a third party makes a payment to a creditor in respect of a company's liability after the examinership protection period has expired
• Where such a payment is made, any amount that would otherwise have been payable to the creditor under a confirmed compromise or scheme of arrangement is redirected to the third party instead
• The payment to the third party is made on the same terms and conditions as those that originally applied to the creditor under the compromise or scheme
• The effect is a statutory subrogation — the third party effectively takes over the creditor's position under the scheme, but only to the extent of the payment made