Advising Bankrupts
Bankruptcy is a process which gives protection to people who are no longer able to pay their debts as they fall due.
A person may be declared bankrupt voluntarily, by lodging a request, or by an order of the court initiated by a creditor. A trustee is appointed to the person who is bankrupt for a period of a least three years. The trustee takes control of their estate and liquidates the assets to distribute them equally among the unsecured creditors (creditors who don’t hold security for a debt).
The process used by the creditor to try and recover any money owed will then differ depending on whether or not you are a ‘secured’ or an ‘unsecured’ creditor.
Secured Creditor
A secured creditor is a creditor who has the benefit of having their debts secured. In the event that the debtor neglects to pay or becomes bankrupt the secured creditor can enforce its security against the debtor and therefore avoid competing against the unsecured creditors for any distribution paid by the trustee in bankruptcy/liquidator of the debtor. The procedure by which a secured creditor may implement its interests is typically set out in the contract which the debtor entered into with the creditor.
Unsecured Creditor
An unsecured creditor is a creditor who does not have the benefit of security of any of the debtor’s assets. Following the appointment of a trustee/liquidator, an unsecured creditor will need to lodge a ‘proof of debt’ form with the trustee/liquidator that sets out the particulars of any debt(s) incurred by the debtor. The liquidator/trustee in bankruptcy will then collect the proof of debt forms it receives from various creditors consider which claims to accept or deny.
The outcome of the bankruptcy is that unsecured creditors are generally not able to commence or continue proceedings to recover debts, although the rights of secured creditors are unaffected. In this case, a creditor may choose to try and increase their chances of recovering monies owed by the creditor by engaging lawyers to investigate the affairs of the debtor, in conjunction with the trustee in bankruptcy to determine whether there are any potentially voidable transactions that may be overturned to the benefit of creditors. The creditors of an insolvent company may also instruct their lawyers to examine whether they may have any potential claims against the directors of the insolvent company.
Roser Lawyers has an experienced team who assist trustees, creditors and debtors with advice and legal representation on all aspects of bankruptcy/liquidation, including:
- Supporting secured creditors to realise their security;
- Instructing and acting for unsecured creditors; and
- Assisting insolvency professionals to investigate and reverse voidable transactions and/or bring a claim against the directors of an insolvent company.
Should you have an issue in relation to bankruptcy or have been contacted by a Trustee or Debt Collector do not hesitate to Contact Roser Lawyers.