I don't pretend to be rich or famous, but as a person I loathe companies or individuals which actually opt to go into receivership or administration instead of paying their bills.
I realise some cases are genuine, but in the main I cannot understand how a company can go into administration, not pay existing creditors, and still continue to trade.
I'm told everyone deserves a second chance. But what about the honest supplier who gives credit to a company, then watches haplessly as the company goes into administration, thereby protecting itself legally from the supplier?
The supplier is then told by the administrator that all payments from now on are guaranteed and the supplier is expected to keep on giving the company credit.
The funny thing is that most suppliers do it, saying it is better to trade and receive some profit than cease trading with the company.
In the company deed, creditors offer to pay x cents in the dollar over a particular period. Problem with that one is that in a lot of cases the promise is never fulfilled and the supplier is expected to keep extending credit.
A company in Adelaide went into administration some years ago, for which I was one of its many creditors. The debt was over $4 million. We were all bluntly told by the administrator that if the company was wound up we would be lucky to see 10 cents in the dollar. Everyone immediately voted for 25.5 cents in the dollar over 18 months.
Bunch of ding dongs!
Anyway, we grew suspicious when no monies came forth after eight months. We decided to call a meeting of creditors - easier said than done. In order to call such a meeting, we would have to find sufficient creditors to represent a certain percentage of the monies owed.
Armed with the list of creditors and monies owed, we got the figures and hands required. Only when we called for the meeting of creditors did we discover that the list of creditors had grown and the monies owed had increased to just on three quarters of a million dollars.
We naturally asked for the list of new creditors to justify this outrageous figure. Legally the administrator does not have to provide this and to this day the list has not been revealed. The remainder of the 20.5 cents in the dollar has not been paid even though the company was wrapped up yonks ago.
Yes, some creditors did receive 5 cents in the dollar, nearly 14 months into the 18 months of administration.
I could cite case after case that I have followed where this has happened, and time and time again the result is the same.
The suppliers continue to cop it on the chin, allowing it to go on instead of getting together and stopping it once and for all. Each time a supplier gets stung, he tightens his systems and makes it harder for the honest creditor.
It is high time we had a register that lists all these delinquents so honest suppliers can peruse and compare notes - oops, I forgot about the civil libertarians - I guess they might object to that!
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