ABSTRACT
Once the liquidator or trustee in bankruptcy has identified and realised the assets which are available to the creditors of the insolvent, the question arises as to the manner and order of distribution. As has been seen, a basic principle of insolvency law since Tudor times is that of rateable or pari passu distribution of the assets.1 In reality, the recognition of pre-existing proprietary rights explained in the foregoing chapters is likely to mean that in many cases, the unsecured creditors are participating rateably in very little.2 Although the ordinary creditors share the available assets equally, the expenses of the insolvency and the preferential creditors must be paid before any assets become available to them.3 The ordinary creditors are a residual class comprising all creditors not specifically designated as preferential or deferred. Post-insolvency interest on preferential and ordinary debts will only be paid if there are funds left after payment of the ordinary creditors. Finally, there is a category of deferred or postponed debts. Each category of debts has to be paid in full before the next category of creditors is entitled to receive anything and where there is insufficient to pay all members of a category fully, the amounts paid will be reduced rateably.
