Help for creditors
If a company that owes you money is in difficulty or has been placed in liquidation or receivership, here is what you can do and what to expect. The process can feel opaque, so this page sets out the practical steps in plain English.
First steps
If you are owed money
A little preparation makes it easier to put your claim forward and to understand your position. A few practical first steps will help.
Gather your documentation
Collect your invoices, statements, the contract or terms of trade, any correspondence and a record of what has been paid. A clear summary of the amount outstanding will support your claim.
Identify any security or guarantee
Check whether you hold any security for the debt, such as a registered security interest, a retention of title clause or a personal guarantee from a director. This can affect how much you may recover.
Check the company's status
Look up the company on the Companies Office to confirm its current status and whether a liquidator, receiver or administrator has been appointed, and who the appointee is.
Making your claim
Lodging a claim (proof of debt)
Once a company is in liquidation, creditors are usually invited to lodge a claim, often called a proof of debt, with the appointed liquidator. This is how you formally tell the liquidator how much you are owed. In a receivership the position is different: the receiver acts for the appointing secured creditor, and unsecured creditors are not usually asked to lodge claims in the same way, so it pays to take advice on where you stand.
Your claim should set out the amount outstanding and be supported by documents that evidence the debt, such as invoices, statements, the contract or terms of trade, and any security or guarantee you hold. The more clearly your claim is documented, the more straightforward it is to assess.
The appointee assesses each claim against the company's records and may ask for further information before admitting or rejecting it. Admitting a claim establishes that you are recognised as a creditor; it does not by itself determine how much, if anything, you will receive.
Recoveries and ranking
What to expect
When a company is wound up, the appointee gathers in and realises whatever assets are available and, after the costs of the appointment, distributes the proceeds to creditors in the order set by law.
That order matters. Secured creditors are generally paid from the assets over which they hold security, and certain preferential claims rank ahead of unsecured creditors. Unsecured creditors are paid after those higher-ranking claims, which means they may receive only part of what they are owed, or nothing at all.
Outcomes and timeframes vary considerably from one appointment to another, depending on the assets available, the claims made and the complexity of the matter. Recoveries are not guaranteed. We can help you understand the realistic prospects in your particular situation rather than offer false comfort.
If you are contacted about a payment
Voidable transactions
In some circumstances a liquidator may be able to recover certain payments or transactions a company made before it went into liquidation. Examples include voidable transactions and voidable charges under the Companies Act 1993, which are intended to ensure that creditors are treated fairly and that no one creditor is unduly preferred shortly before an insolvency.
This is a general outline only and the rules are detailed. If you receive a notice or are contacted about a payment you received from a company that has since been placed in liquidation, it is sensible to take advice promptly before responding, so that you understand your position and any defences that may be available to you.
Common questions
Questions creditors often ask
I am owed money by a company in liquidation. How do I claim?
You lodge a claim, often called a proof of debt, with the appointed liquidator. You set out how much you are owed and attach supporting documents such as invoices, statements, contracts and any security or guarantee. The liquidator then assesses your claim. If you are not sure who the appointee is, you can check the company's status and any appointment on the Companies Office register.
Will I get paid?
It depends on the assets available and where your claim ranks. Secured creditors and certain preferential claims are paid ahead of unsecured creditors, so unsecured creditors may receive part of what they are owed, or nothing. Outcomes and timeframes vary from one appointment to another and recoveries are not guaranteed. We will give you an honest read on the realistic prospects in your situation.
What is a voidable transaction?
In some circumstances a liquidator may be able to recover certain payments or transactions made by a company before its liquidation, for example voidable transactions and voidable charges under the Companies Act 1993. If you are contacted about a payment you received, it is sensible to take advice before responding.
Do I need security or a personal guarantee to recover my debt?
You do not need security to lodge a claim, but it affects how much you are likely to recover. A registered security interest or a personal guarantee from a director can improve your position, so it is worth checking your paperwork early. If you hold a guarantee, that is a separate claim against the guarantor and is not affected by the company's liquidation in the same way.
Talk to us in confidence
If you are owed money by a company in difficulty, a short conversation will help you understand your options and the realistic prospects of recovery.