guide for creditors

Preparing for a creditors’ meeting can be a daunting prospect for a creditor during the insolvency process. Creditors often receive a notice of meeting and are unsure if they need to attend, what they need to bring and the purpose of the meeting. This guide provides a general overview of the different types of corporate insolvencies to assist creditors in preparing for creditors’ meetings.

Download a copy of our Guide for Creditors.

What is the purpose of a creditors’ meeting?
Creditors’ meetings are held for a variety of reasons, and the purpose of the meetings are usually dependent upon the type of appointment, such as a liquidation or a voluntary administration. Some of the meetings held are a requirement of the Corporations Act 2001, and are outlined in further detail below.
Do I need to attend a creditors’ meeting or can I appoint someone else to attend in my place?
Attendance at creditors’ meetings are not compulsory and non-attendance will have no impact upon the validity of your claim against the company or whether you will receive a return (dividend). Furthermore, you do not need to attend the meeting in person to participate. SV Partners ensures that telephone facilities are available for creditors to attend the meeting via telephone. Alternatively, you may appoint a proxy to attend the meeting on your behalf (details below).
What do I need to bring to a creditors’ meeting?

Prior to the meeting of creditors’, you should ensure the following items are submitted to the relevant SV Partners office via email, fax or post.

Proxy Form

A proxy form is specific to each meeting and you should receive a form with the notice of meeting issued by the Liquidator/Administrator. If you are a creditor and have not received this form, please contact the relevant SV Partners office.

The proxy form allows a creditor to appoint a proxy, which may be the liquidator/administrator or any other ‘real’ person the creditor wishes to have represent them at a meeting.  If you do not wish to attend the meeting in person and do not have anyone to attend on your behalf, it is quite common for creditors to appoint ‘the Chairperson’ as their proxy to vote on their behalf.

If the creditor is a company, it is important that a proxy form be completed by the company appointing you as the proxy. This is required even if you are a director of the company.

If you are a creditor in your own right (i.e. there is no corporate structure involved) and wish to attend the meeting in person, you do not need to complete a proxy form.

There are two ways to vote by proxy:

  • General proxy - This is where you allow your proxy (appointed representative) to vote on resolutions as he/she sees fit. Click here to see a sample general proxy form.
  • Special proxy - This is where you can specify how the proxy is to vote on a particular resolution and the proxy must vote in accordance with that instruction. Click here to see a sample special proxy form.

A proxy form submitted for one meeting cannot be used for any other meeting.

Proof of Debt

In order to vote at a creditors’ meeting you must have a valid claim against the company.  You should lodge details of your claim with our office prior to the meeting by completing a ‘proof of debt’ form.

Evidence supporting your claim should be attached to the form and include items such as copies of outstanding invoices.

Important note: If you are a secured creditor (i.e. have a claim registered on the PPSR), you should contact SV Partners prior to completing a proof of debtor form or voting at a creditors’ meeting, as voting on a secured claim can void the security in certain instances.  SV Partners can discuss this with you further as  a variety of factors need to be considered which are not discussed in this guide.

Click here for a copy of a blank proof of debt form.

Click here for a sample of a completed proof of debt form. 

How to vote at a creditors’ meeting?

Initially, voting at a creditors’ meeting will be ‘on the voices’, which simply means the greatest number of ‘yes’ or ‘no’ votes (expressed verbally), or raised hands, in the room will decide the outcome of a resolution. A resolution will be considered passed (or lost) on the voices unless a poll is called. A poll considers the number and value of creditor claims voting on any given resolution, whereas voting on the voices only considers the number.

The Chairperson, two or more creditors, or one creditor holding at least 10% of the value of creditor claims in attendance at the meeting, is able to call a poll. For a resolution to be carried in a poll, a double majority is needed. That is, a majority in number of the creditors present must vote for the resolution and they must hold at least 50% of the value of claims in attendance, or by proxy.

Sometimes there can be what is called a stalemate. For example, a majority of creditors in number vote for a resolution, but they do not hold the required 50% or more in value for the resolution to be carried.

Where there is a stalemate, the Chairperson has the right to exercise a casting vote, choosing to either vote for or against the resolution. The Chairperson may also elect not to use a casting vote in which case the resolution will be lost.

Detailed below is a summary of the most common types of creditors’ meetings and details as to what to expect.

Voluntary Administration

During a voluntary administration, the Administrator will call two separate meetings of creditors.

First Voluntary Administration meeting

The first meeting of creditors must be held within 8 business days of the Voluntary Administrators being appointed. A notice of the meeting will be sent to all known creditors by the third business day of the Administrator’s appointment.

In accordance with the Corporations Act 2001, the mandatory agenda is to:

  • Determine whether or not to appoint a committee of creditors, and if so, who are to be the members; and
  • Determine whether or not creditors wish to replace the current Voluntary Administrator.

  Whilst not mandatory at this meeting, the Administrator will usually provide a summary of their appointment, the prospects of a proposal for a Deed of Company Arrangement and details of any other important aspects of the administration. The Administrator will also provide creditors the opportunity to ask questions.

Second VA meeting

The second meeting of creditors must be held within 26 business days of the Voluntary Administrators being appointed. This can be extended if the appointment falls close to Easter or Christmas, or by application to the Court.

At this meeting, creditors will resolve on the fate of the company. Usually one of three options is available:

  1. To approve a Deed of Company Arrangement, if one has been proposed
  2. To place the company into liquidation
  3. To end the administration and hand the company back to the directors

Creditors may also adjourn the meeting for a period of up to 45 business days.

Creditors’ Voluntary Liquidation (‘CVL’)

Initial CVL Meeting

The initial meeting in a creditors’ voluntary liquidation is usually held around 19 calendar days after the appointment. At this meeting creditors will have the opportunity to discuss aspects of the liquidation and ask questions regarding the Liquidator’s report.  A Liquidator will usually ask for their fees to be approved at this meeting and determine whether a committee of inspection should be appointed. Creditors also have the ability to appoint an alternative liquidator at this meeting.

Other meetings may be called from time to time in a CVL, usually if a Liquidator is seeking fee approval or to discuss material developments of the liquidation. 

Other Corporate Insolvency meetings

As previously stated, a liquidator/administrator may call a meeting to pass whatever resolutions may be necessary, the most common however is being for approval of their remuneration.

For detailed information regarding approving a liquidator’s/administrator’s remuneration, please visit the ASIC website.

The advice in this guide is general in nature. Creditors requiring specific advice should contact SV Partners on 1800 246 801. 

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