The following section provides an overview of the primary powers of creditors when dealing with a company under the Companies Act, under secondary legislation and related case law. For further details, please see the ODCE Information Book "The Principal Duties and Powers of Creditors" downloadable under the "Related Links" section at the end of this page.
Creditor
A creditor of a company is a person or company that is owed a debt by the company. Broadly speaking, there are two types of creditor, namely; secured and unsecured.
Secured creditor
A secured creditor is a creditor that has a claim over some of the borrower's assets. For example, a financial institution which lends money to a company to purchase premises will usually require the deeds to the premises to be given as security for the loan.
Unsecured creditor
An unsecured creditor's is a creditor that is owed money and does not have any claim over the company's assets.
Creditors' Powers
The most significant power that creditors have under the Companies Act is to seek to have the company liquidated (legally dissolved). In addition to liquidation and receivership, creditors have various other powers to address defaults in the operation of a company:
- Power to appoint a liquidator;
- Power to appoint a receiver;
- Power to seek the appointment of an examiner;
- Power to seek court judgements in respect of debts owed;
- Power where default exists;
- Power to seek an investigation of the company;
- Power where a company is not in liquidation;
- Power to seek the restoration of the company to the Register of Companies;
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