Insolvency waterfall: Difference between revisions
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imported>Doug Williamson (Create page - source - ACT - https://www.treasurers.org/hub/treasurer-magazine/time-review-banking-needs) |
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:That was one of the issues with SVB with its clients amongst the VC, tech and life sciences community,' he says. | :That was one of the issues with SVB with its clients amongst the VC, tech and life sciences community,' he says. | ||
'For smaller companies, you might fit within the preferential rung in the insolvency waterfall, but if you're a large company, you’ll be an unsecured creditor for amounts above the [FSCS] £85,000 guarantee – so that's why you would need to examine that,' he says." | :'For smaller companies, you might fit within the preferential rung in the insolvency waterfall, but if you're a large company, you’ll be an unsecured creditor for amounts above the [FSCS] £85,000 guarantee – so that's why you would need to examine that,' he says." | ||
:''The Treasurer online - Risk Management & Strategy - Lawrie Holmes - 14 April 2023.'' | :''The Treasurer online - Risk Management & Strategy - Lawrie Holmes - 14 April 2023.'' |
Latest revision as of 14:25, 23 April 2023
Insolvency - liquidation - claims.
The priority order of claims in an insolvency or liquidation.
Broadly speaking, this priority order is:
- Secured creditors
- Preferential creditors
- Fixed charge creditors
- Floating charge creditors
- Unsecured creditors
- Connected unsecured creditors
- Shareholders
Sometimes abbreviated to waterfall.
Breaching this ordering is a preference, that can be effectively reversed by an order of the court.
- Examine bank account arrangements
- "Geoff O’Dea, a partner at law firm Goodwin Procter... strongly recommends examining bank account arrangements, especially when you have more than one account at a single bank.
- 'A lot of them will have covenants in their loan agreements that require you to bank with the institution.
- That was one of the issues with SVB with its clients amongst the VC, tech and life sciences community,' he says.
- 'For smaller companies, you might fit within the preferential rung in the insolvency waterfall, but if you're a large company, you’ll be an unsecured creditor for amounts above the [FSCS] £85,000 guarantee – so that's why you would need to examine that,' he says."
- The Treasurer online - Risk Management & Strategy - Lawrie Holmes - 14 April 2023.
See also
- Covenant
- Creditors
- Financial Services Compensation Scheme (FSCS)
- Fixed charge
- Floating charge
- Insolvency
- Junior debt
- Life sciences
- Liquidation
- Preference
- Preferential
- Preferential creditor
- Secured creditor
- Security
- Senior debt
- Seniority
- Silicon Valley Bank (SVB)
- Subordinated debt
- Tech
- Unsecured debt
- Venture capital (VC)
- Waterfall
- Waterfall methodology