Prepare instructions before asking to participate in another creditor case

Participation is a decision for the business

You learn that another creditor is pursuing winding up of your customer and want to join in. Before instructing a lawyer, clarify what your company wants assessed and who may authorise the work. Whether participation is available or appropriate is a legal question. The business also needs an informed commercial decision about the evidence, costs and objectives.

Provide the actual account

Imagine a wholesaler whose sales director wants action while accounts is still reconciling credits. Prepare the current debt schedule and supporting agreement, with disputed items identified. Give the adviser the proceeding details and any customer response. Do not present an unreconciled balance as an undisputed debt simply to make participation appear straightforward.

State the objective plainly

Explain whether the company wants advice on the proceeding, possible participation or the effect of a reported settlement. Ask the lawyer to identify suitable options and procedural requirements. Avoid issuing a broad instruction to take over everything without understanding what that would involve. The legal route should follow assessment of the facts rather than an internal preference for a dramatic response.

Understand the collective process

ASIC explains that a liquidator has duties to all company creditors. If liquidation results, your involvement should not be assumed to give your invoice exclusive access to the assets. Ask how that collective outcome affects the commercial objective. Keep expected recovery uncertain unless there is a supported basis for a more specific assessment.

Source: ASIC: Liquidation — a guide for creditors

Agree authority and reporting

Identify who can approve expenditure and give further instructions, including if circumstances change quickly. Ask for the proposed scope, expected costs and information needed at the next decision point. In the wholesaler's example, sales and finance should not separately authorise overlapping work or promise different outcomes to management while the lawyer is assessing one matter.

Keep the instruction current

Notify the adviser promptly of payments, new disputes or communications about the case. Have any relevant dates checked and assigned to the appropriate person. A clear instruction pack helps the lawyer assess the company's position and helps directors understand what they are authorising. It does not create a right to participate or guarantee that participation improves recovery.