Insolvency - your rights
If a company becomes insolvent and goes into external administration or a controller is appointed, as a consumer you may become an 'unsecured creditor'.
An insolvent company is one that is unable to pay its debts when they are due. If a company is in financial difficulty, it may be placed into external administration or a controller may be appointed.
External administration is a term that covers certain types of insolvency arrangements. Liquidators, voluntary administrators and deed administrators are all external administrators, although their duties and responsibilities differ. External administrators (other than certain members’ voluntary liquidators) must be registered by ASIC.
The appointment of an external administrator enables an independent and suitably qualified person (a registered liquidator) to take control of the company so that its affairs can be administered in an orderly and fair way for the benefit of creditors.
The holder of a security interest in some or all of the company’s property or the Court may appoint a receiver (alternatively known as a controller, receiver and manager or managing controller) to take control of some or all of the company's assets to protect their rights under the security interest. In special circumstances the court may appoint a receiver. A receiver must be a person registered with ASIC.
If you are owed money
If you are an unsecured creditor, you will be affected by the appointment of an external administrator or receiver.
An ‘unsecured creditor’ is a creditor who does not have a ‘security interest’, such as a mortgage, in some or all of the company’s assets. Banks usually require a security interest over company assets when they provide a loan, and so are ‘secured creditors’.
You may be an unsecured creditor if you have:
- paid in full for goods or services to be collected or delivered later
- paid a deposit, such as in a lay-by agreement or interest-free offer
- bought a gift card or voucher and have not used it
- returned a product and been issued a credit note
- provided services or goods to the company, or
- made loans to the company.
If you are an employee and you are owed money for unpaid wages or other entitlements, you are also an unsecured creditor. You may be able to get financial help from the Australian Government through the Fair Entitlements Guarantee (FEG).
We are responsible for:
- ensuring external administrators and receivers comply with the law
- promoting confidence in administration of insolvent companies
- supervision of registered liquidators
- hosting the insolvency notices website, and
- implementing insolvency reforms and initiatives.