Personal Insolvency Act 2012

Preferential debts in Debt Settlement Arrangement.

67.— (1) Unless the creditor concerned otherwise agrees in writing and provision is so made in the terms of the Debt Settlement Arrangement, a preferential debt shall, subject to subsection (3), be paid in priority by the debtor and where those debts are to be paid in priority the provisions of section 81 of the Bankruptcy Act 1988 shall apply with all necessary modifications.

(2) In notifying creditors of the issue of a protective certificate, the personal insolvency practitioner shall indicate that any creditor who considers some or all of his or her debt to be a preferential debt is required to furnish evidence of the circumstances of how that debt or part of that debt is claimed to be a preferential debt within such reasonable period as may be specified, and that in the absence of such evidence, the proposal for a Debt Settlement Arrangement may be prepared on the basis that the debt concerned is not a preferential debt.

(3) Where a creditor fails to satisfy the personal insolvency practitioner that his or her debt is a preferential debt, the debt shall be treated as not being a preferential debt for the purposes of a Debt Settlement Arrangement.

(4) In this Chapter, “preferential debt” means a debt which, if the debtor concerned were a bankrupt would be a debt—

(a) that by virtue of section 81 of the Bankruptcy Act 1988 is to be paid in priority to all other debts, or

(b) that by virtue of any other statutory provision is to be included among such debts.