Floating Charges and Priorities
On 25 March 2011 the High Court made its first written judgment on the construction of the Section 285(7) of the Companies Act 1963 and the priority of debts in a winding up. The case concerned three companies in the Belgard Motor Group.
Finlay Geoghegan, J. concluded that the preferential debts of a company in liquidation rank in priority to the claim of a bank to any funds realised from assets the subject of a floating charge. The priority of preferential debts to a claim by a bank arises regardless of whether the floating charge had crystallised prior the commencement of winding up. The usual preferential creditors are the Revenue and certain sums due to the former employees of a company.
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