You are a creditor if you have loaned money, provided goods or services to a company or an individual but you haven’t been paid.

If a company or an individual owes you money, that makes you a creditor. There are different types of creditors – secured creditors (fixed charge or floating charge), preferential creditors, unsecured creditors, and shareholders.

Most companies or individuals become unsecured creditors when a company or an individual they have done business with has become insolvent and cannot pay for the goods, services or loans. The news often comes in a letter and you may be asked to complete a proof of debt. After that, it usually involves many months of waiting without knowing what actually happens.

Types and orders of creditors

There are four primary types of creditors. Knowing what type of creditor you are is important in establishing whether you or your company will be preferred when it comes to payments from the debtor. These are the four primary types of creditors:

Secured creditors

These are creditors with security registered at Companies House and they can either be creditors with a fixed charge or those with a floating charge of a business’ asset(s).

A creditor with fixed charge over an asset will be paid out from realisation of those assets. Realisation refers to the selling of assets that would otherwise diminish in value or see their value completely perish into cash or another type of liquid current asset. So a fixed charge creditor will be paid after the assets are realised and any payments for the cost of realisation have been deducted

A creditor with a floating charge over an asset is paid out following the realisation of the assets (after deductions), following preferential creditors having been paid in full and when the ‘prescribed part’ has been applied. The prescribed part refers to a certain amount of funds due to the secured creditor with a floating charge being set aside for distribution to unsecured creditors.

Preferential creditors

These creditors rank ahead of all other creditors when there is no fixed charge registered on assets that have been realised. They are generally employees who have outstanding wages, holiday pay and unpaid pension contributions.

Unsecured creditors

These creditors rank below preferential and secured creditors (aside from the ‘prescribed part’ as described above) and are generally all creditors outside of the previous two creditors. This is usually the largest group of creditors and generally refers to customers or suppliers who have had some financial transaction with a company that has been unfulfilled.


Shareholders, or members, will be last type of creditor to receive a distribution of asset realisation. All other creditors must be paid in full before shareholders can be paid.

Berley’s insolvency creditor services

In order to make a claim and navigate the complex rules that surround being a creditor, it’s important that you engage with an experienced and licenced insolvency practitioner so that you can be represented during these negotiations and any meetings/proceedings that are held by the debtor’s administrators.

Berley’s insolvency practitioners will assist you with the following:

  • Lodging proof of debt
  • Attending meetings
  • Attending court sessions
  • Negotiating for a better outcome

Additionally, we will regularly update you with reports outlining the prospects of recovering money while detailing the processes we will take to try and secure this money.

This ensures that our clients are always up-to-date on the progress of their claim and have the best idea of a timeline for if and when they would expect to have success with their claim. We will always try to push this timeline forward so that you can get access to these funds as soon as possible.

Impact of Crown Preference

The Finance Act 2020 came into effect on December 1 2020 and this may have a severe impact on unsecured creditors attempting to recover money from debtors. This is because it restores HMRC to its position as a secondary preferential creditor with regards to insolvency, also known as ‘Crown Preference’. It puts HMRC ahead of both secured (floating charge holders) and unsecured creditors in the pecking order of payouts to creditors so that they can recover any unpaid PAYE, NIC and VAT payments.

Even more concerning to creditors is that there is no limit to how much HMRC can claim back which will undoubtedly leave less, if anything, in the pot for certain secured and unsecured creditors. This is why it is now more important than ever to have experts on your side who can navigate this legal and regulatory minefield to ensure that you or your company is as high up the order of payouts as possible.

Benefits of using Berley’s insolvency creditor services

Working with qualified insolvency practitioners gives you the best chance of recovering your money. With Berley’s insolvency team, we only charge a fee that is agreed upon upfront – you won’t receive any hidden charges that you didn’t know about. This allows you to be free of having to do the administrative work required to ensure that you have a chance of getting your fair share of any asset realisation.

To find out more about our insolvency creditor services and how we can help you recover more (or all) of your outstanding debts, simply call our expert team today on 020 7636 9094 to receive a FREE consultation. Alternatively, you can email us via or you can complete our Online Enquiry form and we’ll be in touch with you shortly.