Bankruptcy (Scotland) Act 1985

51 Order of priority in distribution

(1) The funds of the debtor's estate shall be distributed by the permanent trustee to meet the following debts in the order in which they are mentioned—

(a) the outlays and remuneration of the interim trustee in the administration of the debtor's estate ;

(b) the outlays and remuneration of the permanent trustee in the administration of the debtor's estate ;

(c) where the debtor is a deceased debtor, deathbed and funeral expenses reasonably incurred and expenses reasonably incurred in administering the deceased's estate;

(d) the expenses reasonably incurred by a creditor who is a petitioner, or concurs in the petition, for sequestration ;

(e) preferred debts (excluding any interest which has accrued thereon to the date of sequestration);

(f) ordinary debts, that is to say a debt which is neither a secured debt nor a debt mentioned in any other paragraph of this subsection;

(g) interest at the rate specified in subsection (7) below on—

(i) the preferred debts ;

(ii) the ordinary debts,

between the date of sequestration and the date of payment of the debt;

(h) any postponed debt.

(2) In this Act " preferred debt" means a debt listed in Part I of Schedule 3 to this Act; and Part II of that Schedule shall have effect for the interpretation of the said Part I.

(3) In this Act " postponed debt" means—

(a) a loan made to the debtor, in consideration of a share of the profits in his business, which is postponed under section 3 of the [1890 c. 39.] Partnership Act 1890 to the claims of other creditors;

(b) a loan made to the debtor by the debtor's spouse ;

(c) a creditor's right to anything vesting in the permanent trustee by virtue of a successful challenge under section 34 of this Act or to the proceeds of sale of such a thing.

(4) Any debt falling within any of paragraphs (c) to (h) of subsection (1) above shall have the same priority as any other debt falling within the same paragraph and, where the funds of the estate are inadequate to enable the debts mentioned in the paragraph to be paid in full, they shall abate in equal proportions.

(5) Any surplus remaining, after all the debts mentioned in this section have been paid in full, shall be made over to the debtor or to his successors or assignees; and in this subsection " surplus " includes any kind of estate but does not include any unclaimed dividend.

(6) Nothing in this section shall affect—

(a) the right of a secured creditor which is preferable to the rights of the permanent trustee ; or

(b) any preference of the holder of a lien over a title deed or other document which has been delivered to the permanent trustee in accordance with a requirement under section 38(4) of this Act.

(7) The rate of interest referred to in paragraph (g) of subsection (1) above shall be whichever is the greater of—

(a) the prescribed rate at the date of sequestration ; and

(b) the rate applicable to that debt apart from the sequestration.