Dividend (Insolvency)
A payment made by a liquidator, administrator or trustee to creditors out of the funds available in an insolvency, in order of priority.
Paying creditors a dividend
In an insolvency context, a dividend is a payment made to creditors out of the funds an external practitioner has gathered, rather than a company profit distribution. After realising assets and meeting the costs of the administration, the liquidator, administrator or trustee distributes what remains to creditors according to the order of priority. A dividend is often expressed as an amount in the dollar of the admitted claims.
What affects the amount
How much, if anything, creditors receive depends on the funds recovered, the costs involved, and the ranking of competing claims. Unsecured creditors generally share only what is left after higher-ranking claims are met. This is general information only and not legal advice. The way claims are made is described at proof of debt.
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