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Most people do nothing! However you do have rights as a creditor.
You may not realise your customer is insolvent until a notice and a proxy form lands on your desk. The notice will explain to you which insolvency procedure is being sought, the date of the creditors’ meeting and location. The proxy form is an authority given by a person to another person, who must be over 18 (the proxy holder) to attend, speak and vote as his representative.
You, as a creditor, are entitled to vote at that meeting or any adjournment of that meeting. Your voting power will be the equivalent of one vote per £1 you are owed. If you do not wish to attend the meeting you can vote by proxy and state your proxy holder as ‘chairman of the meeting’.
The chairman of a Creditors’ Voluntary Liquidation will be a director of the company, who will usually vote in favour of the resolutions. The main resolution will be for the appointment of a specified liquidator. If you wish to appoint another liquidator you may do so, with their consent.
The chairman of an Individual Voluntary Arrangement (IVA) or Company Voluntary Arrangement (CVA) meeting will be the nominee or a representative who is experienced in insolvency matters.
You will receive a notice, proxy form, a copy of the proposals and the nominee’s report. The content of the proposal will vary dependant upon whether it is an IVA or CVA, but will contain historic information, a current statement of affairs, a comparison statement comparing other insolvency procedures and cash flow forecasts, if trading. Proposals can be lengthily and complicated documents, so they need to be read thoroughly before deciding which way to vote. The proxy is to vote for the agreement/rejection of the proposal. However you can put forward modifications to the proposal eg increase the duration of the Arrangement, increase contributions etc.
The chairman of a Compulsory Liquidation will be the Official Receiver, the appointed liquidator or a representative experienced in insolvency matters. The chairman of a Bankruptcy will be the Official Receiver, the appointed trustee or a representative experienced in insolvency matters. Along with the notice and proxy you will receive a report providing you with an update of the liquidation or bankruptcy. You will be asked to vote on the formation of a creditors’ committee, the basis of the liquidator’s/trustee’s remuneration and the approval to pay and draw disbursements.
The chairman of an Administration will be the administrator or a representative experienced in insolvency matters. Together with the notice and proxy you will receive proposals from the administrator, as with an IVA and CVA these can be lengthily and complicated and need to be read thoroughly before using your vote. You will be asked to vote for or against the proposals and for the formation of a creditors’ committee.
For your proxy to be valid you must complete ALL the details on the proxy form, attach proof of your claim and ensure it reaches the correct location by 12 noon on the business day prior to the meeting.
If you wish to attend the meeting you must put the name of the representative attending as the proxy holder. If you are representing yourself you can turn up on the day of the meeting without providing prior notification, although it is advisable to do so.
CREDITORS BEWARE
It was recently reported that Rockingham Box Limited in Administration is unable to pay their post administration trading creditors in full. If you get a customer who has gone into Administration and the company is continuing to trade, you may be asked by the administrator to continue to supply the company. Before accepting you need to consider the following:
- You will not be paid during the period of Administration for any debt incurred prior to the date of Administration.
- You will be paid prior to the administrator’s remuneration, but this does not guarantee payment in full or even part payment.
- If you wish to continue to trade with the company, think about the payment terms; payment on a pro-forma basis will guarantee payment prior to delivery, payment on delivery is not a guarantee of payment, but less risky than providing credit terms.
If you receive a proxy form and require advice or assistance, or receive proposals which you don’t understand please give me a call. I will explain the documents to you and provide you with advice, free of charge. If appropriate I will attend the meeting with you or on your behalf.
For more information or assistance on any business recovery or insolvency related matter, please contact Cate Lee-Baggaley of BRI Business Recovery and Insolvency on 01604 754352 or via email clee-baggaley@briuk.co.uk or visit our website www.briuk.co.uk. All initial enquiries are free of charge, confidential and without obligation. If you are facing a financial molehill please do call us before it becomes a mountain.
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