Proofs of Debt and Insolvency

 

In the winding up of a company, all creditors must be given an opportunity to lodge their claim in the form of a proof of debt.

A proof of debt is a formal document used to prove that a debt exists and the amount of the debt.  Creditors have the burden to prove the existence and amount of their debt.  Without sufficient proof, a debt will not be admitted for the stated amount, or possibly at all.

Proofs of debt are made in a prescribed form under the Corporations Act.

Creditors can lodge proofs of debt at any stage in an administration.  However, a liquidator must cause notices to be issued for calling for proofs of debt, and a creditor must be given at least 21 days to lodge a proof of debt.  This is important in ensuring that dividends are expedited and not challenged while cheques are being drawn.  The cut-off date for proofs of debt is final and the Corporations Act sets out a creditor’s rights if a proof of debt is not lodged in time.

If you would like assistance in preparing or lodging a proof of debt, please contact our office.


Contacts

If you have any queries about this article, please contact:

Adrian Bambrick

Mobile: 0439 981 969

Email: adrian@bambricklegal.com.au

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