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In a creditors’ voluntary liquidation, a meeting of creditors must happen within 11 days of the appointment of a liquidator being made by the company’s members.
A liquidator may call additional meetings during the liquidation period to provide creditors with an update on progress, to seek creditor approval of the liquidator’s remuneration or for any other reason the liquidator reasonably requires (such as to seek creditor guidance or approval of certain matters).
In a court liquidation, the liquidator isn’t required to call a creditors’ meeting unless a matter requires creditor approval, creditors pass a resolution requiring a creditors’ meeting to be called, or at least one-tenth of all creditors submit a request in writing.
The chairperson of a creditors’ meeting (usually the liquidator or one of their senior staff) must prepare minutes of the meeting and a record of those who were present at the meeting. They must then lodge them with the Australian Securities and Investments Commission (ASIC) within one month of the meeting date.
Quorum at a creditors’ meeting
A creditors’ meeting cannot be validly held without a quorum. A quorum at a creditors’ meeting is when at least two creditors who are entitled to vote attend either in person or via proxy.
If a quorum is not present at a creditors’ meeting within 30 minutes after the time set for the meeting, the meeting is automatically adjourned to the same day, time and place the following week, or to a day appointed by the chairperson (subject to notice requirements).
Voting at a creditors’ meeting
To be entitled to vote at creditors’ meeting, a creditor must lodge details of their debt or claim with the liquidator. Creditors are provided with a ‘proof of debt form’ to be completed and returned before the meeting. Creditors may appoint a proxy to attend and vote at a meeting on their behalf. The proxy may vote generally or as specifically instructed by the creditor.
Voting on resolution at a creditors’ meeting will be initially taken on the voices (creditor’s voice in favour or against). However, a creditor holding more than 10% in value of all votes may request a poll to be taken. A poll is a written ballot of voting. A resolution will be passed if a majority of number and value vote in favour of the resolution.
If there’s a deadlock in the voting, the chairperson is entitled to exercise a casting vote. In exercising the casting vote, the chairperson must detail the reason why he or she voted in a particular way.
Committee of inspection
In both types of liquidation, the liquidator may ask creditors if they wish to appoint a committee of inspection and, if so, who will represent the creditors on the committee. A committee of inspection helps the liquidator approve fees and, in limited circumstances, approves the use of some of the liquidator’s powers, on behalf of all the creditors.
Committee meetings can be arranged at short notice, which allows the liquidator to quickly obtain the committee’s views on urgent matters. Shareholders may also be members of the committee. A committee of inspection acts by a majority in the number of its members present at a meeting, but it can only act if a majority of its members attend.
A liquidator must consider any directions given by the committee of inspection but is not bound to follow them. Minutes of a committee of inspection meetings must be prepared and lodged with ASIC within one month of the date of the meeting.