Preferential Payments in Bankruptcy Amendment Act 1897
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| Citation | 60 & 61 Vict c.19 |
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The Preferential Payments in Bankruptcy Amendment Act 1897 (61 Vict. c.19) was an Act of Parliament of the United Kingdom, affecting UK insolvency law. It amended the category of "preferential payments" for rates, taxes and wages, to take priority over a floating charge in an insolvent company's assets. The Act was passed in broad response to the decision of the House of Lords in Salomon v A Salomon & Co Ltd [1896] UKHL 1, [1897] AC 22.[1]
Section 1 of the Preferential Payments in Bankruptcy Act 1888 first introduced the concept. It was amended by section 2 of the Preferential Payments in Bankruptcy Amendment Act 1897.
The provisions were re-enacted in the Companies (Consolidation) Act 1908, the Companies Act 1929 and the Companies Act 1948.
Unfortunately its provisions were largely ineffective as a floating charge would invariably crystallise into a fixed charge prior to enforcement. It was not until the Insolvency Act 1986 that the definition of floating charge was expanded to include any charge which was created as a fixed charge (ie. irrespective of subsequent crystallisation).
See also
- Re Barleycorn Enterprises Ltd [1970] Ch 465
- UK insolvency law
- UK bankruptcy law
- History of bankruptcy law
Notes
- ^ Re Spectrum Plus Ltd [2005] UKHL 41 at paragraph 132, per Lord Walker: "Saloman v Saloman & Co Ltd was decided by this House on 16 November 1896. WIth remarkable promptness Parliament responded by enacting sections 2 and 3 of the Preference Payments in Bankrtupcy Amendment Act 1897".