In uncertain economic times, it is becoming increasingly important to place emphasis on knowledge within the workplace.
Knowledge is prevalent within all aspects of industry; this brings me to share an important piece of information relating to the credit industry, and in particular to creditors.
I was lucky enough to attend an Australian Institute of Credit Management workshop last week of which placed great emphasis on the difficulties faced by creditors when a company or individual is deemed insolvent.
Everyone reading this is probably aware, or at least familiar with a proof of debt whether it be formal or informal; but how many of you actually know the correct time or circumstances to lodge the proof of debt?
Bruce Patane, from Patane Lawyers made important reference to this conundrum during his presentation, appropriately named ‘Secured vs Unsecured’.
Bruce cleverly explained the benefits and also the little known risks of lodging a proof of debt to a trustee or liquidator.
In my personal opinion, the most intriguing point that was mentioned was the ramifications to a secured creditor if they lodge a proof of debt and consequently vote in a creditors meeting.
Although the creditor in question is secured, did they actually know that they may be indirectly advising the trustee or liquidator that they wish to join the unsecured creditors in the pool of unknowns?
Does the secured creditor also know that by simply cashing a dividend payment, they may also be indirectly jeopardising their security?
In addition to the above, the timing of lodgement is also of essence; the general rule of thumb is to lodge the proof of debt once the necessary checks have been done to ensure that you are not forgoing any potential security.
In my experience, I found that lodging a proof of debt can be very nerve racking because of the consequences that may affect my client later down the track; however, with this additional knowledge of how it can affect my client’s security, I always ensure that due diligence is done before I even put pen onto paper.
For more information, please feel free to contact me on 07 3102 6672 or firstname.lastname@example.org