Jurisdiction | Order of creditor and shareholder/contributory ranking on a debtor's insolvency. |
Argentina | |
Australia | Secured creditors (other than holders of floating charges/circulating security interests). Expenses of the winding-up (including payment of the liquidator). Unpaid wages, unpaid superannuation contributions, and other employee entitlements. Holders of floating charges/circulating security interests. Unsecured creditors. Shareholders.
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Bermuda | Creditors with a mortgage or fixed charge (assets secured in this way are outside the scope of the insolvency). Costs of insolvency proceedings. Employees' debts. Preferential payments. Creditors with a floating charge. Unsecured creditors. Shareholder loans. Shareholders' equity.
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Brazil | Judicial administrator and assistants; labour debts from services performed by debtor's employees. Funds provided by creditors. Expenses from collection/administration/sale of assets, distribution of sale proceeds; costs incurred in connection with liquidation proceedings. Court fees relating to legal and enforcement proceedings. Obligations from juridical acts practiced during judicial reorganisation proceedings or after the bankruptcy decree; taxes relating to taxable events which have taken place after the bankruptcy decree. Labour debts. Secured claims. Tax claims. Claims with special privileges. Claims with general privileges. Unsecured debts. Contractual penalties and fines for breach of criminal or administrative laws. Subordinated debts, including amounts due to shareholders or managers without an employment relationship.
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Canada | The following is the order of ranking: Unremitted payroll deductions. Wage and pension claims up to Can$2,000. Real property taxes. Qualified unpaid supplier claims. Court ordered charges. Valid trust claims. Secured claims. Administration claims. Landlord claims for up to three months' accelerated rent. Amounts that would have gone to secured creditors but for payment of wage and pension claims. Certain workers' compensation claims. General unsecured claims. Equity claims.
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Cayman Islands | Liquidation expenses, including liquidator's fees and disbursements. Preferential debts, which are: certain sums due to employees; certain taxes due to the Cayman Islands Government; for certain Cayman Islands banks, certain sums due to depositors.
Ordinary debts which are not otherwise secured, and not subject to certain subordination or deferral agreements. Ordinary debts that are subject to certain subordination or deferral agreements. In an official liquidation lasting more than six months, interest accruing on the company's debts since commencement of the liquidation. Amounts due to preferred shareholders (under the company's articles of association). Debts incurred by the company to redeem or purchase its own shares, provided the redemption or purchase was to take place before liquidation commenced. Shareholders of the company in accordance with its articles or any shareholders' agreement.
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China | |
Cyprus | Costs of the winding-up. Preferential debts. Any amount secured by a floating charge. Unsecured ordinary creditors. Deferred debts, such as sums due to members in respect of dividends declared but not paid. Share capital. Where there are different classes of share capital, such as preference shares, their respective rankings will be determined by the terms on which they were issued.
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France | The general principles can be summarised as follows: Employees' pre-petition claims benefiting from a statutory super-privilege (in particular, wages in arrears for the last 60 days before the opening judgment). Post-petition court expenses validly incurred after the opening judgment. Lenders that extended credit to a company as part of a workout agreement during conciliation proceedings. In safeguard and rehabilitation proceedings, post-petition claims benefit from a statutory privilege provided they: arise for the purpose of funding the observation period; or represent consideration owed to a lender, or to a provider of goods or services in a business transaction directly connected to the company's activities continued during the observation period.
These post-petition claims must be paid when they fall due. If not, they rank ahead of both secured and unsecured pre-filing claims in liquidation. Claims of post-petition creditors not qualifying for the statutory privilege above rank pari passu with all unsecured pre-filing claims. Shareholders do not receive any repayment of their capital investment, unless a surplus remains after all the creditors have been paid in full (which is extremely rare). In liquidation (as opposed to insolvency) proceedings, certain pre-filing claims rank pari passu with the post-petition claims set out in the fourth bullet point above (for example, claims secured by a mortgage or by a lien over movables with a retention right and claims secured by a pledge on equipment).
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Germany | Insolvency estate creditors. These are claims resulting from new contracts signed by the insolvency administrator. Secured creditors. If a creditor holds a security interest in a property, usually the insolvency administrator must sell the property. The insolvency administrator must disburse the remaining proceeds to the secured creditors. Insolvency creditors. All unsecured creditors who have registered their claims in writing with the insolvency administrator and whose claims have been accepted by the insolvency administrator rank pari passu and are paid from the remaining insolvency estate on a pro rata basis. Subordinated creditors. If the claims of all insolvency creditors are fully paid (which is extremely rare), subordinated creditors are paid. Shareholders. Any remaining surplus is distributed to the shareholders.
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Guernsey | |
Hong Kong | Secured creditors. Liquidation costs. Preferential creditors. Floating charge holders. Unsecured creditors. Shareholders.
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India | First priority is to secure workmen's dues and debts of secured creditors, which together constitute pari passu charges on all of the company's assets. After first priority debts are dismissed in full, second priority is to meet all costs and expenses of the winding-up process. Third priority are all preferential creditors, comprising: Fourth priority are all floating charge holders. Fifth priority are unsecured creditors of the company. Finally, if there is anything remaining after making these payments in full, the balance is paid to the shareholders of the company in proportion to their shareholding.
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Italy | The order of creditor and shareholder rankings are as follows: Preferential claims (crediti in prededuzione). These include: Costs and expenses incurred by the receiver and the court during the course of bankruptcy proceedings are preferential claims. Loans granted by financial institutions to the debtor for a settlement with creditors or a debt restructuring agreement. The expert's costs and fees for validated the plan underlying a settlement with creditors or a debt restructuring agreement.
Secured claims (crediti privilegiati). These include claims secured by mortgages, pledges or liens. Unsecured claims (crediti chirografari). This category includes claims incurred before the bankruptcy petition was filed and the unsecured creditors usually receive a pro rata share of the distributed funds, ranking after the secured claims. Shareholders. In practice, shareholders do not usually receive a distribution from the bankruptcy. If funds are available, holders of preferred shares take priority over ordinary shareholders.
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Japan | While the position of all creditors is superior to that of the shareholders, different priorities exist among the creditors. Claims in bankruptcy cases are generally paid in the following order of priority: In most bankruptcy procedures, priority bankruptcy claims can only be partially paid after all of the administrative claims are paid. Therefore, it is common for no distributions to be made to the bankruptcy claims. |
Jersey | Désastre. In this procedure, the following ranking applies. Fees of the Viscount of the Royal Court of Jersey (Viscount). Debtor's employees (specified entitlement). Taxes (including social security), rent and rates. All other debts proved in the désastre. Any surplus is distributed among the shareholders.
Secured creditors in respect of immovable property are entitled to be repaid as a preference from the realisation of the property to which their security relates, less certain costs. Secured creditors who have a security interest in intangible movable property are entitled to the proceeds of sale (or application of cash and similar security) in respect of the collateral. The secured party must apply the proceeds of sale in a certain order of priority. As between secured creditors, the priority of repayment is determined by the date of the hypothec or security interest agreement, subject to any contractual subordination. A set-off creditor has certain priority under mandatory set-off or contractual set-off rules. The statutory order of priorities does not mention security by pledge or foreign security. Creditors' winding up. The order of priority is generally the same as for a désastre. |
Luxembourg | Creditors in relation to expenses of the estate. Preferred creditors with a general preferential right. Preferred creditors with a special preferential right. Ordinary unsecured creditors. Shareholders.
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Mexico | Employee wages and other monetary benefits due to the debtor's employees accruing during the two years prior to the declaration of business reorganisation. Expenses incurred in the management, preservation, custody and sale of the debtor's assets. Expenses of the insolvency court. Fees and expenses of the examiner, conciliator and receiver. Burial expenses of the debtor (if applicable). Secured debts. Labour debts (different from those mentioned above). Debts in favour of creditors who have the right to withhold the debtor's assets or have other special privileges under Mexican law. Unsecured debts. All shareholders (common and preferred stock) who would only have a right to receive any residual amount after all the above debts are paid.
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Norway | The bankruptcy estate's secured cost (statutory lien) of insolvency proceedings up to 5% of the estimated value of the asset, but limited to NOK602,000 for real estate and some other classes of asset. Certain ordinary property-related taxes and duties. Secured creditors. Unsecured creditors with rank in the following order: the bankruptcy estate's remaining costs of running the insolvency estate and costs incurred by the insolvency estate (after payment of the statutory lien); certain employee debts; various taxes; ordinary unsecured claims where the remaining assets are disbursed on a parity basis.
Interest on claims accrued after the opening of the proceedings. Subordinated claims. Shareholders.
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Poland | |
Russian Federation | Category one. These are satisfied in the following order: First priority. Court expenses in the bankruptcy case; remuneration payments to the insolvency administrator; Second priority. Remuneration payments to employees; Third priority. Payments necessary for the performance of the insolvent company's activities; Fourth priority. Any other claims.
Category two. These are satisfied in the following order: First priority. Claims by individuals who the company is liable to for causing harm to life, health or moral damage; Second priority. Wages to employees; payments to authors of intellectual property created for the company; Third priority. Any other claims.
Category three. These include claims not satisfied by the:
Miscellaneous. Shareholders are satisfied after satisfaction of all other claims. Shareholder loans are satisfied in either the: |
South Africa | Liquidation costs. Secured creditors. If this claim is not satisfied in full, the unpaid balance is a concurrent claim. Preferent creditors. These creditors do not hold security for their claims but rank above concurrent creditors. They include employees' remuneration (up to a prescribed amount) and the South African Revenue Service. Concurrent creditors. The shareholders according to their rights and interests in the company.
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South Korea | In rehabilitation proceedings: Common interest claims. Rehabilitation secured claims. Rehabilitation (unsecured) claims. Shareholder claims/equity holder claims.
Except for common interest claims, the relative priority rule applies. In bankruptcy proceedings: Secured claims are satisfied outside of and without being subject to the bankruptcy proceeding. |
Spain | Preferential creditors. These creditors are divided into two subcategories: Ordinary creditors. Subordinated creditors. Credits against the insolvency state. Legal tacit mortgages. Super privileges granted to employees.
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Sweden | Debts secured on specific property or by special procedures, such as mortgages over real property, pledges or liens. Expenses of winding up the company (that is, the costs and remuneration of the receiver in bankruptcy). Administrator's costs and remuneration in a company reorganisation. The company's audit costs. Debts which the Enforcement Authority (Kronofogdemyndigheten) has secured on particular assets before the bankruptcy through its debt collection powers. Debts secured by a floating charge. Employees' salaries. Unsecured debts. Shareholders' equity.
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Switzerland | Secured claims. These are satisfied directly out of the proceeds from the realisation of the security interest. Debts incurred during proceedings. These are debts incurred during a debt restructuring moratorium with the administrator's consent or by the bankruptcy or liquidation estate. Unsecured claims. These are satisfied in the following order: First class. These are for claims relating to: the payment of employees; accident insurance, non-compulsory pension schemes and pension funds against employers; and maintenance and assistance derived from family law.
Second class. These for are claims relating to: social security contributions; tax demands concerning value added tax (VAT); privileged deposits; and persons whose assets were entrusted to the debtor in parental care.
Third class. This class encompasses all other claims.
Shareholders. These are paid according to the number and face values of their shares.
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UK (England and Wales) | |
United States | Secured creditors. Administrative claimants. Priority unsecured creditors. General unsecured creditors. Equity holders.
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