Proofs of Debt: Evidence, Admission and Disputes

What a Proof of Debt Establishes

Identify the creditor and debtor in the proof, then state the amount claimed and the evidence of the obligation. First establish whether the debtor is a company in liquidation or an individual in bankruptcy. The form and decision-maker depend on that distinction.

Question	Company liquidation	Personal bankruptcy
Who assesses the claim?	The liquidator for a dividend; the person presiding decides voting entitlement at a creditors’ meeting	The bankruptcy trustee assesses the proof
Which form applies?	Formal proofs generally use Form 535; Form 536 applies to the prescribed combined employee proof	The approved bankruptcy proof form; the Australian Financial Security Authority’s (AFSA) online form applies when the Official Trustee administers the estate
What fixes the filing time?	The relevant meeting or dividend notice and applicable procedure	The trustee’s notice or request for the particular process
What does lodging establish?	That the creditor has submitted a claim for assessment	Submission alone does not establish an admitted debt

The Corporations Regulations’ proof requirements distinguish formal proof from the particulars used in other stages of a liquidation. Obtain the form issued for the actual process. A voting admission must not be treated as a final dividend decision.

For bankruptcy, AFSA’s proof-of-debt guidance explains the Official Trustee’s online process. A registered trustee can provide the applicable lodgement instructions. Record the notice’s deadline and purpose beside the proof, then retain confirmation of receipt.

There is no single filing deadline for every insolvency. Ordinary corporate formal-proof notices under regulation 5.6.48 allow at least 14 days after notice. Simplified liquidation has separate provisions. In bankruptcy, follow the trustee’s specified period. A deadline for supplying documents is also distinct from a deadline for challenging a decision.

Reconcile the Amount and Supporting Documents

Reconcile the proof from the original obligation to the unpaid balance, with a document reference for every adjustment. State the cut-off used for the claim so later transactions do not silently change the calculation.

Use the following evidence checklist when preparing or testing a claim.

• Identify the contracting creditor and debtor. Explain any assignment, trading name or claim made by an executor.
• Attach the contract, loan agreement or order establishing the obligation, together with invoices and evidence of performance where relevant.
• Include any judgment and its costs orders. Separate sums already included in the judgment from later amounts to avoid duplication.
• Show payments and their allocation. Cross-reference bank entries to remittances or correspondence where a payment covers several invoices.
• List credit notes, refunds and discounts. Preserve correspondence explaining any disputed adjustment.
• Explain interest separately, with its contractual or other legal basis, rate and calculation period. Identify security and any claimed priority.

A Fictional Invoice Reconciliation

Assume a supplier claims an invoice debt of $40,000, receives a $12,000 part payment and faces a disputed $3,000 credit request. The example excludes interest and costs.

Item	Amount	Evidence and treatment
Invoice for supplied goods	$40,000	Contract, invoice and delivery records support the claim
Part payment received	Less $12,000	Bank receipt and remittance identify the invoice paid
Supplier’s claimed balance	$28,000	Invoice less the confirmed payment
Credit requested by debtor	$3,000 disputed	Returns correspondence requires assessment; no accepted credit is assumed
Balance if the credit is allowed	$25,000	An alternative outcome, not an agreed balance

The supplier can explain its $28,000 claim while identifying the disputed credit and attaching the correspondence. The practitioner can then test whether the credit reduces the debt. Silently deducting the credit or omitting the dispute would obscure what needs deciding.

Correct treatment connects the $12,000 receipt to the invoice through the remittance. Incorrect treatment treats a matching bank amount as proof that every term of the $40,000 invoice is enforceable. A ledger records the calculation. The underlying documents establish its basis.

Where the payment history spans many accounts, FinTrace saves professionals hours of statement review by consolidating supplied transactions into a searchable ledger. Findings cite the source PDF filename and page, giving you the payment evidence to place beside the contract and invoice.

Review Admission, Rejection and Further Evidence

The practitioner assesses whether the documents support the claimed debt and amount, then admits it, rejects it or requests more evidence under the applicable process. Keep the claim, each evidence request and the decision together so another practitioner can follow the reasoning.

A disputed claim needs both parties’ positions and the documents bearing on the dispute. A contingent claim depends on an event that might occur. Explain that event and the basis for any estimate instead of presenting the maximum possible exposure as an agreed debt.

For a related-party loan, obtain the agreement and bank evidence of advances and repayments. Include records explaining whether the money was a loan, capital contribution or payment for another purpose. A director’s loan-account entry alone leaves those questions unanswered.

Corporate evidence requirements under rule 75-95 include retaining the evidence used to accept or reject a claim. For your working file, record the amount sought, amount admitted and reasons for any difference. Identify expressly whether the decision concerns voting or a dividend.

Match the Challenge to the Decision

Different decisions have different court routes and periods. An informal request for reconsideration must not be assumed to suspend a court deadline.

Decision challenged	Route and period
Corporate admission or rejection for voting	Court appeal under rule 75-100(4), within 10 business days after the decision
Liquidator’s rejection of a formal proof, wholly or partly	Court appeal under regulation 5.6.54, within the period in the rejection notice; that period must be at least 14 days after service. The court can extend time
Liquidator’s estimate of a claim of uncertain value	Court appeal under section 554A(3) and regulation 5.6.43A, within 21 days after becoming aware of the estimate, subject to extension
Bankruptcy trustee’s decision under section 102(1), (3) or (4) about a proof	Court review under section 104, applied for within 21 days from the decision, subject to the court’s extension power

The Bankruptcy Act’s specific proof review provision governs the last row. Do not substitute a general complaint process or a general review period for that provision.

On receipt of a rejection, preserve the decision and service evidence immediately. Identify the rejected component, compare the reasons with the documents already supplied and prepare the evidence needed to answer each reason. Any application must address the correct decision and governing court procedure. Seeking leave to proceed against a company in liquidation concerns external proceedings. It is a separate route from determining a creditor’s proof within the liquidation.

Check Security, Priorities and Distributions

Security, set-off and priority affect both the information required and how the claim participates in a distribution. Record each issue separately from the arithmetic of the invoice balance.

For a secured claim, identify the security instrument, secured assets and value attributed to them. Show whether the claim covers a shortfall or involves surrender of the security. AFSA’s guidance describes the available bankruptcy proof options, including a realised or estimated shortfall. Do not claim the full debt as unsecured while concealing security recoveries.

For set-off, identify each obligation in both directions and the parties to it. Section 553C of the Corporations Act and bankruptcy section 86 have their own conditions and restrictions. Netting balances in a spreadsheet does not establish a statutory entitlement to set-off. Keep the gross claims and supporting documents visible for assessment.

For a claimed priority, provide the records supporting that category. An employee entitlement needs employment and payroll evidence. A creditor’s description of a debt as priority does not establish its ranking. The Australian Securities and Investments Commission’s liquidation guide explains the distinction between employee entitlements and ordinary unsecured claims.

A proof addresses the creditor’s claim. The liquidator’s wider investigation and recovery work can affect the funds available for distribution, but it is a separate task.

Before closing the claim file, compare the admitted amount with the dividend calculation and payment record. For example, an admitted unsecured claim of $25,000 at a dividend of 20 cents per dollar produces a $5,000 distribution. Confirm that the payment matches that calculation and record any unpaid balance. Admission establishes participation on the accepted basis. It does not guarantee that funds exist for a dividend.

Choose and Complete the Proof Form

Form 535 is the general formal proof of debt or claim for company liquidation. The official Form 535 PDF download contains the form on printed pages 28 and 29 of the Corporations Regulations, Volume 5. Form 536 covers the prescribed proof on behalf of employees.

For bankruptcy, use AFSA’s Form 8 proof of debt when a registered trustee administers the estate. Send it to that trustee. The Official Trustee uses AFSA’s online process. Follow the trustee’s notice for the submission method and deadline.

Complete the company proof against the supporting records in this order.

1. Identify the company by its name and registration number. Enter the creditor’s full legal name and address, including any relevant capacity.
2. State how the debt arose and the amount outstanding at the relevant winding-up event. Attach contracts, invoices and any judgment supporting the claim.
3. Reconcile the amount to prior payments and credits. Show interest separately, with its legal basis, rate and calculation period. Preserve any disputed adjustment in the schedule.
4. Disclose satisfaction already received and every security held. Give the required particulars and assess the value of security over company property.
5. Sign and date the proof. An employee or agent completing it must address the form’s written-authority declaration. Retain the attachments and lodgement receipt together.

The bankruptcy form separately records the debtor, trustee and creditor details, security and any judgment. Its debt schedule deducts payments received and the estimated security value. Calculate claimed interest to bankruptcy under AFSA’s instructions.

For the fictional invoice example, the form and attached schedule must explain the $28,000 claimed balance and the disputed $3,000 credit. Compare that total with the contract, invoice and $12,000 receipt before lodging. Completing or lodging a proof submits the claim for assessment. The practitioner’s admission remains a separate decision.