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© 2017 by Australia Business Rescue.

CREDITORS & EMPLOYEES

You are a creditor if you are owed money. You may be a creditor of a company already under some form of external administration, or you may be a creditor looking to take steps to recover the monies owed to you from a Company or its Director under a Personal Guarantee.

As a creditor, you have rights in an external administration of the Company, and you have rights to take steps to recover monies owed to you by a Company.

Wind Up a Company to Recover your Money

If you are a creditor looking to take steps to wind a company up for non-payment of your debt, we can point you in the right direction. You will need a Liquidator to Consent to Act in your application to wind the company up. The process is actually a legal process and the application must be filed with the Court. You will need to engage a solicitor to file the appropriate application on your behalf. We can refer you to a solicitor that suits your needs.

Creditors and Employees in an External Administration

The rights of Creditors vary depending on the type of external administration – Voluntary Administration, Liquidation or Receivership. 

Creditors may be Secured, or Unsecured. A Secured Creditor is one who holds a valid Registration on the Personal Property Securities Register (PPSR) over the Company and all of its Undertakings, or over Specific Assets of the Company.

Each Unsecured Creditor, actual or contingent (and able to be estimated), is entitled to 1 vote at any Meeting of Creditors held in a Voluntary Administration or Liquidation of a Company. The unsecured portion of a Secured Creditor’s claim is also entitled to 1 vote. A creditor who holds 10% or more of the voting value at a meeting, or 2 creditors together at a meeting, are entitled to request a Poll to determine the outcome of a resolution put to the meeting. The Poll requires that for a resolution to pass, it must pass on number AND value.

Unsecured Creditors may be Priority or Ordinary. Priority Unsecured Creditors are specific classes of claims such as Employee Claims. Employee Entitlements are afforded a Priority in payment over the claims of Ordinary Unsecured Creditors. Unless you are a Secured Creditor with a registration on the PPSR, a Priority Employee Creditor or hold subrogated rights as a Priority Creditor, you are most likely an Ordinary Unsecured Creditor.

Often Ordinary Unsecured Creditors do not receive a return from a winding up of a Company. We wish the reality was different. We strive in our winding up processes to enable some form of return to creditors, however often the commercial reality of taking certain recovery action greatly outweighs the benefit.

If you are an employee, the Department of Employment offers the Fair Entitlements Guarantee (FEG) Scheme as a safety scheme for employees who have lost their job due to the Winding Up or Liquidation of their Employer.

If you are an employee in a Receivership of a Company, you are entitled to a Priority in payment of your Employee Entitlements ahead of Secured Creditors and Ordinary Unsecured Creditors from specific Asset Realisation known as Floating Assets or Non-Circulating Assets, which are Assets that are not fixed in nature, like Cash at Bank, Stock and Debtors.

Please feel free to contact any member of our team to discuss your specific questions.

Replace Administrator or Liquidator at a Creditors Meeting

From time to time a creditor in a Voluntary Administration or Liquidation of a Company may deem certain circumstances warrant the replacement of the appointed Administrator or Liquidator.

Creditors have the right to nominate and appoint and alternate Administrator or Liquidator at the relevant meeting of creditors.

The strongest basis on which it warrants the replacement of the appointed Administrator or Liquidator is on the grounds of an Actual or a Perceived Conflict of Interest.

If you are a Creditor that feels strongly enough that the appointment of an Administrator or Liquidator does not appear to be Independent and Impartial such that your Rights and Interests as a Creditor may be prejudiced, we invite you to speak with us about your Options.

In the right circumstances as governed by legislation and best practice, we would be happy to Consent to Act as Administrator or Liquidator on your behalf if nominated by you at a Meeting of Creditors to consider a replacement Administrator or Liquidator.

Defend Voidable Transaction Claim by Liquidator

If you are a Creditor who has had a claim brought against you by a Liquidator for some form of a Voidable Transaction, such as a Preference Claim or an Uncommercial Transaction Claim, we encourage you to speak to us about the Claim with a view to Reviewing it and advising on its deficiencies in order that it can be struck out, dismissed, defended or revised downwards.

We have had considerable success in having claims against Creditors reduced or thrown out because of deficient claims being brought against them.