03/08/2023 by Jaye McCarthy 0 Comments
Creditors Meetings Explained
The creditors meeting takes place at a place and time as advertised in the statutory notices (10 days notice by post to creditors and advertised in 2 daily newspapers) and is chaired by one of the directors who may be assisted by an accountant or legal advisor.
The purpose of the meeting is:
· To lay before the meeting a Statement of Affairs of the company.
· To ratify the nominated liquidator or to give the creditors an opportunity to appoint their own preferred choice of liquidator (outcome dictated by monetary claim of creditors ‘votes’ or proxies).
· To give the creditors an opportunity to appoint a Committee of Inspection.
Why should a Creditor attend a Creditors’ Meeting?
· To receive a Statement of Affairs and assess the likelihood of receiving a dividend from the Liquidator.
· To ascertain if any stock left in company which may be recoverable under ‘Retention of Title’ clauses.
· To nominate your own choice of Liquidator who will be independent and maximise your chances of recovery
· To nominate yourself on the Committee of Inspection to whom the Liquidator has reporting duties, thereby keeping you informed of the status of the liquidation
· To assess whether the directors have engaged in reckless trading, and whether there will be an action taken by the Liquidator personally against the directors, which would maximise your recovery.
· To assess what other customers are hit by the company wind up, which can be useful commercial knowledge in a particular industry (i.e. risk of domino effect of bad debts)
It is in your interests that a competent Insolvency Practitioner attend the meeting on your behalf. A General Proxy form (or vote) is issued to creditors by post. This form must be returned to the company’s registered address by 4pm on the day prior to the meeting. It is important to receive advice on how to complete this form correctly.
Typical Questions to ask at a Creditors Meeting:
· Who prepared the Statement of Affairs? (If the nominated liquidator has assisted with this, his independence is in question)
· When did the company cease trading? (was there an orderly winding up?)
· When did the directors realise the company was insolvent? (there may be an issue of reckless trading)
· When were the last set of accounts filed at the CRO? (were proper books maintained?)
· Were there Personal Guarantees in place re company loans? (this brings in the issue of preferential payments in the insolvency period)
· Will the directors continue the business through another company? (this brings in the issue of the Phoenix Company syndrome and what assets are at stake which if purchased by the directors, must be an arm’s length transaction at market value.
For advice or respresentation at creditors meetings, please contact our restructuring team.
Chartered Certified Accountants
01 444 5260