On 6 April 2020, the Insolvency Act 1986 (Prescribed Part) (Amendment) Order 2020 came into force. It increased the maximum amount of the prescribed part from £600,000 to £800,000, however the increase will only apply where the floating charge affected was created on or after 6 April 2020.

If the lender has a relevant floating charge which was created prior to 6 April 2020, the cap will remain at £600,000 regardless of the date of the insolvency appointment.

The Insolvency Act 1986 (Prescribed Part) (Amendment) Order 2020

2. (1) The Insolvency Act 1986 (Prescribed Part) Order 2003 is amended as follows.

(2) In article 3(2) for “£600,000” substitute “£800,000”.

(3) The substitution made by paragraph (2) does not apply where the company’s net property is available to be distributed to the holder of a relevant floating charge.

(4) A relevant floating charge is one —

(a)created before the date this Order comes into force, and

(b)in respect of which no floating charge over any of the company’s assets created on or after that date ranks equally or in priority.

(Link)

Date of floating charge(s)

·         All created before 6 April 2020

Prescribed part cap - £600,000

·         Created both pre- and post-6 April 2020, where the latter do not rank equal to or in priority to the former

Prescribed part cap - £600,000

·         Created both pre- and post-6 April 2020, where the latter do rank equal to or in priority to the former

Prescribed part cap - £800,000

·         All created on or after 6 April 2020

Prescribed part cap - £800,000