Advice if you supply a business that has gone into administration

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If you are a supplier to a company that has gone into Administration there is a good chance that you will be owed money. That makes you a “creditor” of the company and entitled to participate in the Administration process. An appointed Administrator has a duty to write to all creditors to advise of their appointment as soon as reasonably practicable following his/her appointment and at that point you should provide them with details of your debt owed.

Supplying a company in Administration

Additionally, they must also send a formal report of the strategy and proposals within eight weeks of the appointment and at that point you can vote to accept or reject them. In order to pass the proposals the Administrator requires more than 50% of creditors in value to approve them, so the more you are owed the more power you hold if you are not happy with the report of an Administrator. On some occasions the strategy of the Administrator will be to continue to trade the business whilst he/she seeks a purchaser and they may need your ongoing supplies. Firstly, it is important to note that any such supplier agreement is between yourself and the company in Administration. As such it will not usually involve any historic debt being repaid. Secondly, you are entitled to decline to provide any further good or services if you so decide and whilst this may hamper the Administrator’s ability to achieve their purpose, this is not your issue. However, if you agree to supply the company in Administration then you should firstly be provided with a separate letter of supply by the Administrator which will outline the procedure for placing orders. Provided you follow this then this letter will guarantee payment for your supplies during this trading period. It is extremely important that you read this letter and understand the procedure and the persons who can place orders to ensure your payment is guaranteed. A word of warning; pay attention to the authorised personnel as it is not unusual for the former directors to continue within the business during the trading on period and they may be used to placing orders. This does not guarantee that they are authorised to place orders on behalf of the Administrator so you must understand whose signature you require on purchase orders to guarantee payment or you may find yourself having invoices rejected.

Get in touch with The Insolvency Experts

If you are a creditor of a company that is in Administration or any other form of insolvency and you receive a report that you require assistance with then The Insolvency Experts can advise you without charge. Separately, if you believe that your company may be financially distressed and you require impartial financial advice on available options then The Insolvency Experts can assist. Contact us online or call a member of our team directly on 0300 303 8284.