INSOLVENCY & LAW
Creditor’s Guide to Creditors’ Meetings
Business rescue . Debt recovery . Insolvency support
We empower creditors by attending Creditors' Meetings and Committees, and improving outcomes.
A Creditors' Meeting (also known as a Meeting of Creditors) is usually convened shortly after a company becomes insolvent to:
- Explain what went wrong
- Secondly, appoint an insolvency practitioner
- Agree the insolvency practitioner's fees
- Lastly, vote on how to move forward with the business.
A Creditors' Voluntary Liquidation commences with a virtual or physical Meeting of Creditors, which convenes no more than 7 days after creditors are notified of the liquidation.
In contrast, the procedure is slightly different in Administration and a Company Voluntary Arrangement; or when a person utilises an Individual Voluntary Arrangement.
In these instances, creditors hold the Meeting of Creditors within 14 days of distributing the proposal. Furthermore, the meeting takes place within 10 weeks from the date the company entered into Administration.
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Benefits of a Creditors' Meeting
There are no legal guidelines or restrictions in regards to remuneration for insolvency practitioners. As a result, they will discourage you by charging excessive fees to hold meetings. However, during the first physical meeting, creditors have the opportunity to empower themselves and develop an insolvency strategy. I&L can take instructions on your behalf to attend and represent your interests. Subsequently, oftentimes we connect with other creditors to stimulate significant support prior to the meeting because strength can be found in numbers.
Committee of Creditors
The main objective of a Committee of Creditors (or Creditors' Committee) should be to separate the director from the insolvency practitioner to ensure they're working in the interest of creditors.
Fixing an Insolvency Practitioner's Fees
If there is no Committee of Creditors to set their fees, creditors accept the insolvency practitioner's remuneration package by deemed consent. However, to gain control over an insolvency practitioner's pay, simply form a committee (see below).
Replacing an Insolvency Practitioner
We believe the choice of insolvency practitioner should rest with creditors. However, in most cases the insolvent appoints the insolvency practitioner simply because creditors fail to use the power of their votes at Creditors' Meetings. Therefore, If creditors are dissatisfied with the insolvency practitioner and 50% of voters in value and in attendance (including by proxy) agree; they can replace them with 1 of their own choice. Moreover, I&L can recommend a commercially-minded insolvency practitioner to manage the process for you.
Call 0207 504 1300 for help with Compulsory Liquidation Assessment
Discuss your situation in confidence
Financial distress is rarely straightforward, and delay often increases risk.
If you are a creditor, investor, or director affected by insolvency, speaking to an experienced insolvency expert can help clarify where you stand and what may follow.
Contact our team at Insolvency & Law to book a confidential consultation now