Recognition
"Secured" doesn't mean "first in full, no exceptions"
A lender with a registered charge expects to be repaid from the asset it covers before unsecured creditors see anything. For a fixed charge, that's broadly how it works. For a floating charge, UK insolvency law deliberately carves out a portion for unsecured creditors first, before the floating-charge holder is paid.
Why it happens
A floating charge doesn't just activate. It "crystallises"
Until something triggers it (typically the company entering administration or liquidation), a floating charge hangs over a class of assets that changes day to day: stock gets sold, debtors get collected, cash moves. On crystallisation, it fixes onto whatever's actually there at that moment. What happens next is where the prescribed part comes in.
Where this fits
The prescribed part, in real figures
Under section 176A of the Insolvency Act 1986, a portion of what a floating charge would otherwise realise is set aside for unsecured creditors before the floating-charge holder gets paid: 50% of the first £10,000 of the company's net property, plus 20% of the remainder. For floating charges created on or after 6 April 2020, that carve-out is capped at £800,000 (see the Insolvency Act 1986 (Prescribed Part) (Amendment) Order 2020). For floating charges created before that date, the older £600,000 cap still applies. The date the charge was created decides which cap, not the date of the insolvency.
Worth knowing before assuming full recovery: a floating-charge holder relying on that security alone, with no fixed charge over specific assets, should expect the prescribed part to reduce what's actually available, not treat the charge's face value as the recovery figure.
Specialist insight
Fixed charges sit outside the prescribed part entirely
The prescribed part only applies to what a floating charge captures. Proceeds from an asset covered by a genuine fixed charge (specific plant, a property, or a defined set of book debts if drafted tightly enough to count as fixed) go to that charge holder first, in full, before unsecured creditors or the prescribed part come into the picture at all. This is one real reason lenders prefer fixed charges over specific assets where they can get them, rather than relying on a floating charge over the whole business.
Decision helper
What typically fits
If you're relying on a floating charge as your only security, it's worth checking whether any part of what it covers could realistically be restructured as a fixed charge over specific, identifiable assets. That portion would sit outside the prescribed part entirely. See what makes a floating charge qualifying for the related question of what enforcement rights the charge actually carries.
Alternatives and limitations
The actual figures in any specific insolvency (the value of net property, what counts as genuinely fixed versus floating in practice) are determined by an insolvency practitioner working through the real accounts, not by this page. Sources: Insolvency Act 1986, s176A; SI 2020/211.
