What is the role of a creditor during insolvency?

Firstly, there are different types of creditors:

1.      Preferential creditors being typically employees for arrears of wages and holiday pay

2.     Secured creditors e.g.  banks for their loans and overdrafts

3.      Unsecured creditors which are typically trade creditors and other creditors such as employees for redundancy and pay in lien of notice.

Each type of creditor has a say in the insolvency process. The appointed Insolvency Practitioner could possibly have a creditors’ committee where certain representatives will act as a sounding board and give him/her direction on the case relevant matters and also agree the costs for the work that’s done.

Sometimes if a creditors’ committee is not appointed, then the creditors will have the same control over the Insolvency Practitioner either through the initial creditors meeting or through the reporting process.

Creditors have rights throughout the insolvency process, this being if they are dissatisfied with the conduct of the Insolvency Practitioner or if certain levels of creditors by value percentage are unhappy, they can ask for meetings to be called for the replacement of the Insolvency Practitioner. They can also go to court to seek the replacement of the insolvency practitioner or to challenge their fees.

If you would like any more information, click here or, a member of our team is available to call on 0113 242 0808 or email advice@chamberlain-co.co.uk