# The Payment and Electronic Money Institution Insolvency (Scotland) Rules 2022, Rule 127: Order of priority in distribution

Extent: S

(1) The funds of the institution’s assets must be distributed by the administrator to meet the following expenses and debts in the order in which they are mentioned—
(a) the expenses of the special administration,
(b) any preferential debts within the meaning of section 386(1) of the IA 1986 (excluding any interest which has been accrued to the date on which the institution entered special administration),
(c) ordinary debts, that is to say, a debt which is neither a secured debt nor a debt mentioned in any other sub-paragraph of this paragraph,
(d) interest at the official rate, between the date on which the institution entered special administration and the date of payment, on—
(i) the preferential debts,
(ii) the ordinary debts,
(e) any postponed debt.
(2) In paragraph (1)—
(a) “postponed debt” means—
(i) a creditor’s right to any alienation which has been reduced or restored to the institution’s assets under section 242 of the IA 1986 or to the proceeds of the sale of such an alienation,
(ii) a claim arising by virtue of section 382(1)(a) of the Financial Services and Markets Act 2000 (restitution orders), unless it is also a claim arising by virtue of sub-paragraph (b) of that section (a person who has suffered loss etc.), or
(iii) in special administration, a claim which by virtue of the IA 1986 (as applied by regulation 37) or any other enactment is a claim the payment of which is to be postponed.
(3) The expenses of the special administration mentioned in paragraph (1)(a) are payable in the order of priority mentioned in rule 95.
(4) Subject to section 175 of the IA 1986 (as applied by paragraph 65(2))—
(a) any debt falling within either of sub-paragraphs (1)(b) or (1)(c) is to have the same priority as any other debt falling within the same sub-paragraph,
(b) where the funds of the institution’s assets are inadequate to enable such debts to be paid in full, they are to abate in equal proportions.
(5) Any surplus remaining, after all expenses and debts mentioned in paragraph (1) have been paid in full, must (unless the articles of the institution provide otherwise) be distributed among the members according to their rights and interests in the institution.
(6) Nothing in this rule affects—
(a) the right of a secured creditor which is preferable to the rights of the administrator, or
(b) any preference of the holder of a lien over a title deed or other document which the administrator has taken into their custody or control in accordance with paragraph 67.

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Source: https://www.legislation.gov.uk/uksi/2022/1239/rule/127 (the official version)
Page: https://openlegislation.uk/payment-and-electronic-money-institution-insolvency-scotland-rules-2022/rule-127
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.