(1) If a designated or formerly designated credit institution, or its parent entity or any company related to the institution, becomes subject to an insolvency or resolution process, preferred creditors are, for the purpose of satisfying their claims and rights under this Part, entitled to have recourse to the cover assets that are comprised in the relevant cover assets pool ahead of members of, and contributories to, the institution and all other creditors of the institution, parent entity or company. This section applies irrespective of whether the claims of creditors other than preferred creditors are preferred under any other enactment or any rule of law and whether those claims are secured or unsecured.

(2) Subject to subsection (3), the claims of preferred creditors of a designated or formerly designated credit institution rank equally among themselves but if those claims cannot be fully satisfied they are to abate in proportion to the amounts of those claims.

(3) The claims of tier 1 creditors rank ahead of those of any other preferred creditors and equally among themselves, but if the first-mentioned claims cannot be fully satisfied, they are to abate in proportion to the amounts of those claims.