Insolvency - your rights
If a company becomes insolvent and goes into external administration, 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.
External administration is a term that covers all types of insolvency arrangements. Liquidator, voluntary administrator and receiver are all external administrators, although their duties and responsibilities differ. Most types of external administrator must be registered by ASIC. An external administrator is sometimes called an insolvency practitioner.
Liquidation of an insolvent company enables an independent and suitably qualified person called a liquidator to take control of the company so that its affairs can be wound up in an orderly and fair way for the benefit of creditors.
If you are owed money
If you are an unsecured creditor, you will be affected by the appointment of an external administrator.
An ‘unsecured creditor’ is a creditor who does not have a ‘charge’, such as a mortgage, over the company’s assets. Banks usually require a charge 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 insolvency practitioners comply with the law
- promoting confidence in insolvent company administration
- supervision of registered liquidators
- hosting the insolvency notices website, and
- implementing insolvency reforms and initiatives.