38.— (1) The Insolvency Service, on receipt of a sum under subsection (2) or (3) of section 36 or under section 37, shall deal with that sum in accordance with this section.

(2) On receipt of a sum referred to in subsection (1), the Insolvency Service shall, subject to subsection (3)—

(a) apportion that sum, on a pari passu basis, among the specified creditors to whom a specified qualifying debt that is a permitted debt is owed, and

(b) within one month of such receipt, transmit to each such specified creditor payment of the sum apportioned to that creditor under paragraph (a).

(3) Where, following a payment or payments to specified creditors under subsection (2) or subsection (4), as the case may be, all of the specified qualifying debts referred to in subsection (2) have been paid in full, the Insolvency Service shall, in relation to a sum referred to in subsection (1)—

(a) apportion that sum, on a pari passu basis, among the remaining specified creditors concerned, and

(b) within one month of such receipt, transmit to each such specified creditor payment of the sum apportioned to that creditor under paragraph (a).

(4) Where the Insolvency Service—

(a) has apportioned a sum to a specified creditor under subsection (2)(a) or (3)(a), as the case may be, and

(b) after reasonable efforts, is unable to locate that specified creditor,

it shall apportion the sum referred to in paragraph (a) among the specified creditors referred to in subsection (2)(a) or (3)(a), as the case may be, whom it has succeeded in locating and, within one month of doing so, shall transmit to each such specified creditor payment of the sum so apportioned.

(5) Where a specified qualifying debt is secured, the Insolvency Service, in apportioning a sum to the specified creditor concerned under subsection (2)(a), (3)(a) or (4), shall disregard the value of the security held by the specified creditor for that debt.