Business gone into receivership owing us a lot of money. Help!

[James Smith]

As above, not much point jumping up and down. There is nothing the company can do assuming they really are in receivership. It would be illegal for them to pay you.

What will happen is that the receiver will write to you to confirm how much money they owe. All the assets of the company are added together and some secured creditors get paid out first. What is left in the pot is divided up between the unsecured creditors (ie you). So if they owe (say) £1million and have £300,000 left, you will get 30p in the £. BUT this will be months away, so assume its zero for now, and anything else is a bonus.

Successful prosecutions of dodgy directors are rare so I wouldn't waste your energy.

So what CAN you do? Well save your business is the key thing. Its all probably feeling rather raw right now, but what i would suggest you do is get on the phone to your accountant (they will be busy as its self assessment season, but if they are good they should help you out in your hour of need) and see if you can get some help to try and save your business. If they are any good they will be delighted to put down the tax return and actually use some of their skills to good use.

I have helped a few clients this year see the wood for the trees and make sure they carry on. Given you have other customers and this one was on a low margin, you might even be able to make more money without them in the long term. Might just take some stepping back and looking at rationally rather than emotionally which is bloody hard to do when its your business and your employees at stake. I obviously don't know your business, but most businesses can be retrenched, the overheads cut enough to buy some time so that you can put all your energies into getting some more volume and rescuing the situation. In a small firm employees are often surprisingly flexible.

Hope that helps

Regards,


+ not a dig, but for other readers of this thread and "what not to do", extending credit to a single large customer is always a bad plan. You should never extend more credit than you can afford to lose, or you end up like this poor poster when things go bad. The way to deal with it is to be polite by firm, and if you get not cash, you don't send any more stock until the balance is back the right way (that is to say in the 'painful to lose' but not critical territory). Either they want you to supply and pay - or they don't get the stock. A lot easier to say than to do, but its important to be able to say "no". When you cant say "no" they have you over a barrel.