Section Sch7-2 — Companies Act 1993: Conditions to priority of payments to preferential creditors

2 Conditions to priority of payments to preferential creditors (1) The claims listed in each of subclauses (2), (3), (4), and (5) of clause 1 — (a) rank equally among themselves and, subject to any maximum payment level specified in any Act or regulations, must be paid in full, unless the assets of the company are insufficient to meet them, in which case they abate in equal proportions; and (b) in so far as the assets of the company available for payment of those claims are insufficient to meet them,— (i) have priority over the claims of any person under a security interest to the extent that the security interest— (A) is over all or any part of the company's accounts receivable and inventory or all or any part of either of them; and (B) is not a purchase money security interest that has been perfected at the time specified in section 74 of the Personal Property Securities Act 1999; and (C) is not a security interest that has been perfected under the Personal Property Securities Act 1999 at the commencement of the liquidation and that arises from the transfer of an account receivable for which new value is provided by the transferee for the acquisition of that account receivable (whether or not the transfer of the account receivable secures payment or performance of an obligation); and (ii) must be paid accordingly out of any accounts receivable or inventory subject to that security interest (or their proceeds). (2) For the purposes of subclause (1)(b), the terms account receivable , inventory , new value , proceeds , purchase money security interest , and security interest have the same meanings as in the Personal Property Securities Act 1999. (3) To the extent that the claims to which subclause (1) applies are paid out of assets referred to in paragraph (b) of that subclause, the amount so paid is an unsecured debt due by the company to the secured party. (4) Clause 9 of this schedule, as was in force immediately before the commencement of the Personal Property Securities Act 1999, continues to apply in respect of a company whose property was subject to a floating charge that, before the commencement of that Act, became a fixed or specific charge.