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<p>The government does not expect this reform to significantly impact access to finance
or the cost of borrowing.</p><p>The independent OBR did not make any adjustments to
their economic forecast in regard to this measure.</p><p>At Budget 2018, the Government
published the following assessment:</p><table><tbody><tr><td><p>Type of Creditor</p></td><td><p>Explanation
and Examples</p></td><td><p>Current Average Percentage of Debt Recovered in Insolvency</p></td><td><p>New
Average Percentage of Debt Recovered in Insolvency</p></td></tr><tr><td><p><ol><li>Fixed
charge secured creditors</li></ol></p></td><td><p>Lenders to whom the business granted
security, primarily financial institutions. When a fixed charge is provided, the company
loses the right to sell or trade the item. These assets tend to be fundamental to
the business; for example, machinery, property or vehicles.</p></td><td><p>36%</p></td><td><p>36%
(unchanged)</p></td></tr><tr><td><p><ol start="2"><li>Insolvency practitioners</li></ol></p></td><td><p>Fees
for overseeing the process.</p></td><td><p>As charged</p></td><td><p>As charged</p></td></tr><tr><td><p><ol
start="3"><li>Preferential Creditors</li></ol></p></td><td><p>Claims by the Redundancy
Payment Service (RPS) and Financial Services Compensation Scheme (FSCS) on behalf
of employees and customers (to statutory limits); and from 2020, HMRC will be a secondary
preferential creditor (below the RPS and FSCS) for Value-Added Tax, Employee National
Insurance contributions, Pay-As-You-Earn Income Tax and Construction Industry Scheme
Deductions.</p></td><td><p>83%</p></td><td><p>83% (unchanged) for existing preferential
creditors; 14% for HMRC</p></td></tr><tr><td><p><ol start="4"><li>Floating charge
secured creditors</li></ol></p></td><td><p>Lenders for whom the company is not granted
security, primarily financial institutions. This tends t be the case in relation to
assets that are not fixed; for example, stocks, raw materials, fixtures and fittings
or cash.</p></td><td><p>36%</p></td><td><p>Less than 36%</p></td></tr><tr><td><p><ol
start="5"><li>Unsecured creditors</li></ol></p></td><td><p>All remaining creditors,
including HMRC debts levied directly on businesses; and debts owed to suppliers, contractors,
landlords and customers.</p></td><td><p>4%</p></td><td><p>Less than 4%</p></td></tr><tr><td><p><ol
start="6"><li>Shareholder</li></ol></p></td><td><p>Only get paid if all the above
creditors are paid in full.</p></td><td><p>N/A</p></td><td><p>N/A</p></td></tr></tbody></table><p><strong>
</strong></p><p> </p>
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