When a company owes you money, you are considered a creditor. And as a creditor, you are entitled to get your money back. If you have reached this point, then it is highly likely that the company you are dealing with is insolvent. And if the company is insolvent, it will be more difficult to get your money back. However, there are steps you can take in an effort to get your money back from a debtor company.
To learn more about winding up a company that owes you money, read on. You can also talk to one of our experienced commercial lawyers.
3 Ways of Winding Up a Company That Owes You Money
1. Demand for Payment
While it is not legally required that a creditor send the insolvent company a letter of demand, it is recommended that you do so. The letter of demand should include a short statement of the outstanding debt and a request that the monies be returned within a specific time frame. This will place the debtor company on notice and give them an opportunity to return the funds to you.
2. Statements of Claim
- Examination Summons: The company will be required to appear before the Court and explain the manner in which the debt will be paid in full.
- The Sheriff of the Court can be instructed to seize and sell property to make the creditor whole.
- A Charging Order can be issued to give the creditor an approximate value in the company’s holdings.
3. Apply to the Court
If the company is unable to pay the debt or set aside the findings of the Court, you can then use these failures against the company and proceed with the winding up of the company. An application for winding up a company that owes you money must include the following:
- Draft Order
- Affidavit in support of your application
After you make an application with the Court, you must do the following:
- The application must then be properly served on the company which you are attempting to wind up
- The application must be filed with the ASIC
- You must publish notice of the application
There are strict timelines that you must adhere to when attempting to wind up a company that owes you money. Therefore, it is highly recommended you enlist the services of a solicitor that specialises in the processes of dissolving a company.
The debtor can now choose to voluntarily liquidate and make payments to the creditors or they can choose to defend against the claim. If they choose to defend against the outstanding debt, a hearing will be scheduled by the Court.
If the Court determines that your application has merit and finds against the company that owes you money, the Court will appoint a liquidator to begin the process of liquidating the debtor company’s assets to pay the outstanding debt owing.
The appointed liquidator will then begin their investigation into the debts and assets of the winding up company. Once a thorough investigation has been completed and a full accounting of the company is available to the liquidator, distribution of the assets to the creditors can begin. The petitioning creditor will get paid first. The balance of the monies available will be distributed as follows:
- Liquidators fees
- Secured Creditors
- Employee’s owed wages or superannuation
- Outstanding employee benefit payouts
- Unsecured creditors
Seek Help From Experienced Insolvency Lawyers
While the process can be time consuming, if you are a creditor who is owed money from a company, you are entitled to apply to the court to be made whole.
However, if you are going to pursue winding up a company that owes you money, it is highly recommended you see the professional advice of an insolvency lawyer.
If you find yourself in need of assistance with debt recovery or any other legal issue, please contact the law offices of Owen Hodge Lawyers. At Owen Hodge, we are always happy to assist clients in understanding the full ramifications of any and all of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 770 780.