Creditor of an insolvency

Creditor of an Insolvency

Creditor of an Insolvency

Creditor of an Insolvency is in someways linked to a posts called “Creditor How to Recover Your Money” and “Creditor Unpaid Debt Advice“.


The answer could be as a result of matters of belief reinforcing the outcome. If you believe that you are unlikely to receive a distribution in a liquidation or from a bankruptcy estate then it is going to be no surprise to such a creditor when they receive nothing. 


The problem is that the belief not only supports the outcome but it could indirectly affect the outcome itself. The liquidator or trustee in bankruptcy enters office as a stranger needing information. A useful source of independent information is available from creditors but if creditors do not engage in the process because they consider it to be a waste of their time, valuable information might never get into the hands of the officeholder which could be detrimental to the administration of the insolvent estate and returns to creditors.


Officeholders need creditors to engage and share information so that discovery of important factual information is not left to chance. 


The potential absence of funds in an insolvency makes it more difficult for an officeholder to investigate. However, for an important public function to be subject to a lack of potential transparency is worrying if Directors can be subject to less scrutiny when they hand an insolvent company to an officeholder with seemingly no assets to fund investigations. This makes the engagement of creditors conceivably crucial. 


Although crediors are not considered to be the client as the officeholder has no client, if officeholders want to encourage creditor engagement and belief in the process then responding to them with expedition is likely to be warranted. 


The other thing of course is that creditors need to submit details of their claim to the liquidator.


There is a Creditors Guide available which is useful.





Leave a Comment