What Are Preferential Payments?
Preferential payments are made to creditors who have a claim against a company that is in liquidation. The payments are made from the company’s assets, and they are given priority over other creditors.
This means that if a company goes into liquidation, the creditors who are owed preferential payments will be paid first. Employees, customers and suppliers may not be paid in full or at all.
Liquidators are required to make preferential payments to certain creditors, including:
- Employees who are owed wages or salaries
- Customers who are owed refunds
- Suppliers who are owed money for goods or services that were delivered within 20 days of the company going into liquidation.
Preferential payments can only be made from the company’s assets. This means that if there are not enough assets to cover the preferential payments, the creditors will not be paid.
What Do Preferential Payments Mean For Your Business?
In certain cases, the liquidator may choose to make preferential payments to creditors. This can happen if the company is unable to pay all of its creditors in full.
Preferential payments can have a significant impact on your business, especially if you are an employee, customer or supplier of the company that is making the payments. If you are owed money by the company, you may not receive all of the money that you are owed.
The liquidator is the only person that can recover preferential payments, although a Court Order is required.
How Can Brisbane Debt Solutions Help You?
If you are facing insolvency or struggling to manage your debts, Brisbane Debt Solutions can help. We are a team of experienced insolvency practitioners, and we can help you to understand your options and make the best decision for your circumstances.
Preferential payments can be a complex issue, and we can help you understand your rights and obligations. Contact us today to speak to one of our experienced team members.
Preferential Payments FAQ’s
What are preferential payments, and how can Brisbane Debt Solutions assist in this matter?
Preferential payments are payments made by a company to certain creditors in the lead-up to insolvency, which may be considered unfair or preferential by other creditors. Brisbane Debt Solutions can provide expert advice and assistance to directors and creditors who may be affected by preferential payments and help them navigate the legal and financial implications.
What are the consequences of receiving preferential payments in Brisbane?
Creditors who receive preferential payments may be required to repay them to the liquidator, which can impact their own financial position. Directors who make preferential payments may face personal liability for any losses suffered by the company. Brisbane Debt Solutions can provide advice on managing the consequences of preferential payments and developing a plan to address the company’s financial issues.
How can Brisbane Debt Solutions help to prevent preferential payments in Brisbane?
Brisbane Debt Solutions can provide advice and assistance to directors and creditors to help them understand their obligations and avoid making or receiving preferential payments. This can include implementing policies and procedures to ensure fair and equitable treatment of all creditors, monitoring financial transactions to identify potential issues, and developing strategies to manage the company’s financial affairs. By taking proactive steps, directors and creditors can reduce the risk of preferential payments and potential legal and financial consequences.