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How to complete a Statement of AFfairs (SOA)

Step 4 - Putting it into the correct format

This area requires some technical knowledge and consideration should be given to seeking some professional help. 

There are many different factors that could affect the presentation and who is entitled to what, however the broad categories and how they should be treated are outlined below.

Statement of truth

Should be fairly self explanatory.

Assets specifically pledged

This section should include any assets that are subject to a fixed charge.  If there are no fixed charges then this section would be blank.

Assets subject to a fixed charge will normally include mortgaged properties, assigned book debts and Hire Purchase assets.

Within this section the asset book value and expected amount to be realised will be detailed on an asset class by class basis. 

e.g 

Example of assets specifically pledged

The order of priority of the fixed charge holders will normally be based upon the date the charge was registered (the older the charge the higher the priority) but consideration should be given to any deed of priority in force.

Any shortfall on fixed charges will need to be either included in the amounts owed to floating charge holders (if they hold a floating charge) or to unsecured non-preferential creditors (if they do not).

Any surplus on fixed charges will normally be available to meet the preferential creditor claims so would be totalled after the next section.

Assets not specifically pledged

This includes assets that are either not subject to any charge or are subject to a floating charge – i.e. all assets that are not included in Assets Specifically pledged.

These assets will normally just be listed with their book value and estimated recoverable amount.

The total of these assets is then carried forward to the next page (page A1) as the estimated amount available for the Preferential creditors.

Preferential creditors

For all cases where the insolvency appointment date is on or after 15 September 2003 the preferential creditors are limited to a small number of types, all relating to employees.  After this date HM Revenue and Customs (Inland Revenue and Customs and Excise) are no longer entitled to preferential treatment.

The main types of preferential claims are:

  • Arrears of wages – up to 800 per employee
  • Holiday pay – no limit
  • Certain pension scheme contributions

If money was specifically advanced by a party (including the bank) for the purpose of paying wages and this resulted in a reduction of the above claim then they may have a preferential claim up to the above limit.

The total of the amounts available for preferential creditors less the preferential creditors would be called either the surplus or deficit as regards preferential creditors.

Prescribed part calculation (Prescribed Part of Net Property)

Whether this is relevant depends on the floating charges registered against the company:

  • No floating charges – does not need to be included
  • All floating charges dated prior to 15 September 2003 – no calculation required
  • All floating charges dated after and including 15 September 2003 – calculated (see below)
  • Some charges dated prior to and some after 15 September 2003 – how this is treated depends on the priority of the chargeholders. 
    • Priority matches dates (i.e. the pre 15/9/03 charges have higher priority than post) then these chargeholders can claim against the gross total amount available after preferential creditors.  The prescribed part calculation would be based on any assets remaining after these pre 15/9/03 creditors.
    • Priority doesn’t match dates – complex so obtain advice.

Where appropriate the prescribed part is calculated as:

  • 50% of the amount available up to 10,000
  • 20% of the remaining amount
  • Maximum prescribed part is 600,000

Only applies if there is a surplus after meeting the preferential claims

The prescribed part is deducted from the amount available after the preferential creditors and is added back in later after the floating charge holders.

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Floating charge holders

Those creditors holding a floating charge would be listed here.  If they also had a fixed charge then only the amount owed after deduction of the asset value would be included here.

After deduction of the floating charge holders there will either be a negative figure or positive figure.

As mentioned above the amount of the prescribed part (if applicable) would be brought in after here and before the next section.

Unsecured, non-preferential claims

Other creditors would be listed here by category, e.g. trade and expense creditors, employees, HM Revenue and Customs, etc.

If not included elsewhere, the deficit on fixed and floating charges would be included in this section (but do not participate in the prescribed part).

The total of all this would be either a surplus or deficit with regards to unsecured creditors.

Share capital

The share capital is then listed by category of share.  The total of this plus the above is the surplus available for or deficit towards members.

Supporting exhibits

All creditors of the Company must be listed individually together with details of their security, address and amount of debt.  This should add up to the figures in the Statement of Affairs.

The shareholders of the company should also be listed separately.




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