SFA InfoLeaflet15 21/07/2008 16:59 Page 1
Ref: No 8 September 2008
Simple Facts of Accounting
Creditors’ Guide to
No:15 Creditors Meetings
In many cases the first indication that a supplier gets of a customer being in financial
difficulty is the Notice of a Creditors Meeting.
Section 266 of the 1963 Companies Act states that notices of the meeting of creditors
must be sent by post to the creditors at least 10 days before the date of the meeting
with proxy forms. Notice of the creditors meeting must also be advertised in two daily
newspapers circulating in the vicinity of the registered office or principal place of business
of the company
The notice sent to the creditors convening the meeting must attach a general and special form of proxy.
Generally speaking, if a creditor wishes to ensure that its choice of liquidator is appointed, then it needs to seek
the support of as many creditors as possible and encourage them to return proxies that are validly completed
and are in favour of the creditor’s representative.
The creditors of the company will either be limited companies or creditors who are owed monies personally.
The rules governing the conduct of creditors meetings state that a proxy representing a limited company must
under the common seal of the company
under the hand of some officer duly authorised who must state that fact on the proxy form.
In practice, to avoid any dispute over the admissibility of a proxy submitted by a limited company, it is advisable
that the person duly authorised who signs the proxy on behalf of the creditor writes in beneath his name the
following term: "Duly authorised officer of the company".
Statement of Affairs
The directors are obliged to present a full statement of the position of the company's affairs, together with a list
of creditors of the company and the estimated amount of their claims to the meeting of creditors. The
statement should show the book values of the company's assets with the directors estimated realisable values
in a winding up.
At the creditors meeting the nominated director, who acts as chairman of the meeting, will give a brief outline
of the history of the company and details of the causes of failure.
Voting on the Nomination of the Liquidator
The nominated liquidator should not have previously acted for the company or its directors in a professional
capacity. In order for the creditors to over turn the company's nomination of liquidator, Section 267 of the
1963 Companies Act states that they must have sufficient votes in value of the creditors represented to carry
The Institute of Certified Public Accountants in Ireland
The Institute of Cer tified Small Firms Association
Public Accountants in Ireland
84/86 Lower Baggot Street,
17 Harcour t Street, Dublin 2, Ireland Dublin 2
Phone 01 4251000 Phone 01 605 1500
Fax 01 4251001 Fax 01 661 2861
Email firstname.lastname@example.org Email email@example.com
Web www.cpaireland.ie Web www.sfa.ie
SFA InfoLeaflet15 21/07/2008 16:59 Page 2
Format of the Creditors Meeting
Generally speaking, the creditors meeting will take the following format:
The creditors will be handed a copy of the directors estimated statement of affairs.
The nominated director will read out his statement outlining the company's history and causes of
Any creditors present may then ask questions.
Creditors are provided with an opportunity to appoint their choice of liquidator. A formal vote may be
taken on the appointment of a liquidator.
Creditors are provided with an opportunity to appoint a Committee of Inspection. The creditors are entitled
to nominate up to five people onto this committee, and the shareholders are entitled to appoint three
people. The purpose of the committee is to assist the liquidator in carrying out his duties. The committee
can also approve the liquidator’s fees.
Questions asked at the Creditors Meeting
The creditors are entitled to ask questions that relate to the company's affairs. Some creditors will send along,
or attend the meeting with, professional representatives who are very knowledgeable about insolvency
matters. A flavour of some types of questions that may be asked are set out below:
1. When did the company cease trading? (A creditor may wish to know if the company continued to
order goods after it had ceased trading.)
2. When did the directors first realise the company was insolvent? (This is probably the most important
question to ask. If a director openly admits that his company was hopelessly insolvent, say 6 months
ago, and continued to purchase supplies from creditors, then he may be sued personally for Reckless
3. Provide details of all major payments made in the past three months? (A creditor may wish to
determine if other creditors received “preferential” payments”.)
4. When was the last set of audited accounts prepared? (A creditor may wish to assess if the directors
acted “responsibly” by maintaining regular accounts.)
5. Did the bank have personal guarantees as security for the company's lending?
6. Who owns the building that the company operated from?
7. Will the directors continue the business through another company? (A creditor may wish to “black list”
any new company that the directors become associated with!)
Specific questions may also be asked on the statement of affairs presented to the meeting. Creditors
attending the meeting may have copies of the last set of accounts filed at the Companies Registration
Office, and they may ask questions based on these accounts.
The Institute of Certified Public Accountants in Ireland
Written by Tom Murray, Partner, Friel Stafford Corporate Recovery –
a specialist corporate recovery and insolvency practice.
Disclaimer For further assistance…
This information bulletin is intended to be used as a guide. Please contact the Institute of Certified Public Accountants in Ireland
For further information you should speak to your CPA at 01 4251000, who can put you in touch with your nearest CPA
professional advisor. Neither the Institute of Certified Public practice. The Institute is a statutory accountancy body with over 5,000
Accountants in Ireland, or the Small Firms Association can
be held liable for any error, or for the consequences of any members and students. CPAs work both in practice, in all areas of
action, or lack of action arising from this bulletin. Irish commercial life, and work in 28 countries around the world.