When a company goes into liquidation, unsecured creditors cannot simply demand payment. To participate in any distribution from the liquidation estate, you must lodge a document known as a proof of debt. Without it, the liquidator will not pay you anything — regardless of how much money you are owed.
This guide explains what a proof of debt is, who needs to lodge one, how to complete it, what supporting documents you need, and what happens if you miss the deadline or your proof is disputed.
What Is a Proof of Debt?
A proof of debt is the formal written claim that a creditor submits to a liquidator (or administrator) in a company insolvency administration. It is the mechanism by which creditors prove the amount they are owed and establish their right to participate in any distribution.
The proof of debt process is governed by Schedule 8A of the Corporations Regulations 2001 (Cth), which prescribes the form creditors must use. Courts and liquidators take the accuracy of proofs seriously — a proof of debt is made under oath and any false statement can have serious legal consequences.
The proof of debt serves two purposes. First, it establishes that the debt exists and quantifies it. Second, it determines the creditor’s priority class — which directly affects whether, and how much, they will be paid from the liquidation proceeds.
Who Needs to Lodge a Proof of Debt?
Any unsecured creditor who wishes to receive a dividend from a company’s liquidation must lodge a proof of debt. This includes:
- Trade creditors — suppliers, subcontractors, or service providers with unpaid invoices
- Employees — for unpaid wages, superannuation, annual leave, or long service leave
- Landlords — for outstanding rent, make-good costs, or lease break fees
- Lenders — unsecured loan creditors (secured creditors have separate rights under their security documents)
- Customers — who paid deposits or advances for goods or services not delivered
- The ATO and other government bodies — for unpaid tax liabilities, superannuation guarantees, or penalties
Secured creditors — those holding a registered charge or mortgage over company assets — do not need to lodge a proof of debt to enforce their security. However, if the secured debt exceeds the value of the security, they may lodge a proof for the unsecured shortfall.
The Proof of Debt Form
The prescribed form is the Proof of Debt — General Form, which is Form 535 under the Corporations Regulations 2001. Liquidators will typically attach the form to their initial circular to creditors. It is also available from ASIC’s website.
The form requires:
- Full name and address of the creditor
- Total amount of the debt being claimed
- Particulars of how the debt arose (date of transaction, nature of goods or services, contract reference)
- Details of any security held for the debt
- Whether any set-off, counterclaim, or cross-demand exists
- A declaration that the particulars are true and correct
- Signature of the creditor or an authorised representative
For company creditors, the form should be signed by a director or officer with authority to make the claim.
How to Complete a Proof of Debt
Completing a proof of debt accurately is essential. An incomplete or inaccurate proof can lead to a dispute with the liquidator, delay your claim, or result in rejection.
Step 1 — Identify the total debt. Calculate the full amount owing as at the date the company entered liquidation (the “winding up date”). This typically includes the principal amount plus any contractual interest accrued to that date. Post-liquidation interest does not normally accrue against an insolvent estate.
Step 2 — Provide full particulars. The form asks you to describe how the debt arose. Be specific: list invoice numbers, dates, descriptions of goods or services, and the contract or agreement under which the debt accrued. Vague descriptions (“goods supplied”) are more likely to be disputed.
Step 3 — Disclose any security. If you hold a charge over company property (e.g., under a PPSA registration), disclose it. Failure to disclose security can affect your rights in the administration.
Step 4 — Attach supporting documentation. See below for what to attach.
Step 5 — Sign and date the form. The declaration must be signed by someone with personal knowledge of the debt. For individual creditors, that is the creditor themselves. For companies, a director or authorised officer.
Supporting Documents to Attach
Attaching supporting documents significantly reduces the risk of dispute and accelerates the liquidator’s assessment. You should attach:
- Copies of unpaid invoices — clearly showing the amounts, dates, and services or goods described
- The relevant contract or purchase order — the document under which the debt arose
- Delivery receipts, job completion certificates, or acknowledgment of services — evidence that the goods or services were provided
- Statement of account — a ledger or account summary showing the history of transactions
- Correspondence — any written acknowledgment by the company of the debt, payment plans, or dispute history
- PPSA search certificate — if you are claiming as a secured creditor for a shortfall
For employee claims, attach your payslips, any employment contract or enterprise agreement, and a calculation of entitlements broken down by type (wages, annual leave, long service leave, superannuation guarantee shortfall).
Deadlines for Lodging a Proof of Debt
The liquidator will set a call for proofs — a deadline by which creditors must lodge their claims. This is usually set out in the initial circular to creditors, together with notice of the first creditors’ meeting.
The deadline is typically 30 days from the date of the notice, but it varies. If you miss the first deadline, the liquidator may still accept a late proof if a distribution has not yet been declared. However, you have no right to participate in any distribution that has already been declared before your proof was accepted.
If you receive a circular from a liquidator, treat the deadline for lodging your proof as urgent. Once a dividend is declared and distributed, late creditors may miss out entirely.
What Happens After You Lodge?
Once the liquidator receives your proof, they will assess it against the company’s books and records and the supporting documents you provided. The liquidator has three options:
- Admit the proof in full — accepted as lodged
- Admit the proof in part — the liquidator accepts some but not all of the claimed amount
- Reject the proof — the liquidator disputes the debt entirely
If your proof is admitted, you will participate in any dividend distribution in your priority class. Do not expect to receive the full amount — in most company liquidations, unsecured creditors receive cents in the dollar (if anything at all).
Disputed Proofs of Debt
If a liquidator admits your proof only in part, or rejects it entirely, you will receive written reasons for the decision. You then have the right to appeal to the court under section 554J of the Corporations Act 2001 (Cth).
An appeal must be lodged within 21 days of being notified of the liquidator’s decision, unless the court extends time. The court will examine the evidence and determine the correct amount of the debt. In Re Laminex Group Ltd [2007] NSWSC 494, the court confirmed the court’s jurisdiction to review a liquidator’s adjudication of a proof of debt.
If a liquidator decides to “go behind” a proof that is supported by a court judgment — that is, to re-examine the underlying debt rather than simply accepting the judgment — the creditor can challenge that process as well. This is a more technical area of insolvency law where legal advice is essential.
What Happens If You Don’t Lodge a Proof of Debt?
If you do not lodge a proof of debt before a dividend is declared, you will not receive any payment from the liquidation — even if the company owes you a large sum. The liquidator distributes only to creditors who have lodged admitted proofs.
There is no automatic mechanism to recover a share of the estate after a distribution is made and creditors paid. Missing the deadline is a serious and often irreversible outcome.
For this reason, if you receive any communication from a liquidator about a company that owes you money, you should act immediately — lodge your proof, attach your supporting documents, and meet the deadline.
Frequently Asked Questions
Can I lodge a proof of debt in a voluntary administration?
If you are facing a building or construction dispute in Queensland, construction lawyers Brisbane at Boss Lawyers can help you navigate your options. Call Mark Harley on 1300 267 711.
Yes. Creditors can lodge proofs of debt in both voluntary administrations and liquidations. In a voluntary administration, proofs are relevant if the administrator calls a meeting to consider a Deed of Company Arrangement (DOCA). Under a DOCA, only creditors who have lodged proofs and voted at the creditors’ meeting may receive a distribution. This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
What if the amount owed to me is disputed by the liquidator?
If the liquidator rejects or reduces your proof, you will receive written reasons. You have 21 days to appeal to the court under s 554J of the Corporations Act 2001 (Cth). The court will examine your evidence and the liquidator’s reasons and make a fresh determination. Acting quickly is essential — the 21-day window is strict. This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
Can Boss Lawyers help me with a proof of debt?
Yes. Boss Lawyers assists creditors in lodging proofs of debt, disputing unfair adjudications by liquidators, and recovering maximum entitlements from insolvent estates. If you are owed money by a company in liquidation and want to understand your position, contact us on 1300 267 711 or visit our insolvency lawyers page. This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
If you are a creditor seeking to recover a debt from a company in liquidation or voluntary administration, our insolvency lawyers Brisbane can advise on your rights, help you prepare a complete proof of debt, and challenge a liquidator’s decision if your claim is wrongly rejected. Call Boss Lawyers on 1300 267 711.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances. Boss Lawyers Pty Ltd | ABN 38 143 136 645 | Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000 | 1300 267 711
Need expert advice on creditor rights in an insolvency? Boss Lawyers acts for creditors in Australian insolvency proceedings and complex commercial disputes. Contact our insolvency lawyers Brisbane or our commercial litigation lawyers Brisbane for strategic advice. Call 1300 267 711.
