Disputes about unpaid debts - small proprietary companies - video transcript
Transcript of video about what to do if you have a dispute over a small proprietary company and an unpaid debt, presented by Lakshmi, ASIC's Misconduct and Breach Reporting team, uploaded 20 August 2014.
What are unpaid debts?
If you provide goods or services to a small proprietary company then you and that company have entered into an agreement or a contract. The contract can be written or verbal. If the company does not pay you for your goods or services then you and that company have a dispute over an unpaid debt. In this instance the company's unpaid debt is owed to you.
What else can you tell me about unpaid debts?
Well, a breach of a contract is not a criminal matter and a contract is only enforceable by the parties to a contract. The parties should try to resolve the dispute between themselves and if they cannot do so they should take the matter to court for a resolution.
If a small proprietary company cannot pay its debts, this may be a sign that it is experiencing financial difficulties or an insolvency practitioner has been appointed. But in any event, a dispute over an unpaid debt is still a contractual matter that the parties need to resolve or must take to court.
So what are my options?
Firstly, you should raise the issue with the company directly and review ongoing trading arrangements.
You can also search the ASIC website to see if another creditor of the company has taken winding up action or if an insolvency practitioner has been appointed. If one has been appointed, we recommend that you contact them and you may also wish to obtain your own legal advice.
If you are unsure where to start we recommend you contact the law society in your state or territory.
What's ASIC's role?
ASIC generally does not get involved in relation to unpaid debts. Nor will we intervene if a small proprietary company is experiencing financial difficulty. This is because the options we have already discussed are more likely to result in creditors being able to recover their money. ASIC will generally only take action when there is a greater public benefit in us doing so. However, if your unpaid debt relates to your entitlements as an employee of a small proprietary company you may wish to look at our other clip on employee entitlements.