The Circumstances in which the Prescribed Part Order applies
The Two Tests
For unsecured creditors to benefit from the "prescribed part" and receive a distribution from the insolvency estate, two tests must first be satisfied:
- The insolvency process, whatever it may be, must commence after the 15th September 2003.
- The intervening bank debenture must have been created after 15th September 2003.
Because of this second test it is likely that for many years to come (while pre 15th September 2003 debentures continue in existence) the "prescribed part" will not apply in many insolvencies and therefore this is something that will always need to be checked before any distributions to any class of creditor are made.