Expenses of winding up - section 1282 Companies Act 2006
The purpose of this provision is to allow general liquidation expenses to be recovered out of floating charge assets, where other assets are insufficient. This will ensure that liquidations are appropriately funded and that the conduct of directors is properly scrutinised.
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Whilst the Government recognises that banks and other floating charge holders will bear much of the cost in many liquidations, this does not represent a change in the Government’s policy. It merely puts the position back to that which existed for more than 30 years until the House of Lords’ decision in re Leyland Daf in March 2004.
The provision also provides for rules to be introduced to give the holders of floating charges and preferential creditors a say in the amount of liquidation expenses that can be recovered by a liquidator. The Insolvency Service is giving consideration as to how this mechanism should work in practice, and is currently working on the drafting of the associated secondary legislation.
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