Creditors' meetings

Question:

Liquidators have different views regarding proxies and representatives of company creditors at creditors meetings. What is the correct procedure?

Legislation:

The legislation which applies is:

  • The Companies Act 1993, Section 314
  • The Fifth Schedule to the Companies Act 1993, Clause 6 and Clause 9
  • The Companies Act 1993 Liquidation Regulations 1994, Regulations 23 and 27.

Answer:

An examination of the legislation shows that a company may be represented at a meeting of creditors in two separate ways (refer the legislation for full details): -

Formally by proxy (in writing):

    • The company may appoint a proxy.
    • The proxy may be any person including the liquidator or if there is no liquidator, the chairperson of a meeting.
    • Where the person appointed as a proxy is proposed as liquidator, then the person holding the proxy may use the proxy to vote in favour of himself or herself as liquidator, if it is not inconsistent with the terms of the proxy to do so.

By representation:

    • A body corporate [company] which is a creditor may appoint a representative to attend a meeting of creditors on its behalf.
    • The chairman of the meeting (in most cases the liquidator) is entitled to ask and receive proof that the company has appointed the representative.
    • If satisfactory proof is not forthcoming then if the person present could show that they were connected with the company most chairpersons would allow that person to remain at the meeting but would not let them exercise a vote.

Summary:

A Company is entitled to attend a meeting of creditors: -

  • By appointing a proxy
  • By appointing a representative

We enclose a suitable letter which could be used by a representative who attends several meetings. It is to be noted that Clause 19 of the Companies Act 1955 Liquidation Regulations 1994 provides as follows: -

A person shall not be entitled to vote as a creditor unless, by the time the vote has been taken the creditor has filed a liquidation claim form.

DISCLAIMER
This article is intended to provide general information and should not be construed as advice of any kind. Parties who require clarification on issues raised in this article should take their own advice.

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