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

[DressingGown]

Hey, as title says, a customer has gone into receivership owing us a very large amount of money, a debt that built up rapidly over the last few months. The amount is such that it looks as though we will have to close our business too. We had no insurance on them as their credit rating was so bad- a warning sign we should have taken. My question is though, is there any basic law or legislation that could cover us or get some money from them? They've really screwed us over, they must have known how bad their finances were, but they kept ordering like crazy.

Thanks.

Dee.

[Alvin]

Very sorry to hear this ,No advice I am afraid that would be legal.

The liquidators take the lions share first and rarely leave any scraps behind.

Time our limited company law was ovehauled to stop these scams.

Alvin

[seanstevens]

Two thoughts on this one:

1. It depends when the last order was placed as your only real chance is if you could prove that Directors knew they were going out of business at the time of placing the order. This is very hard to prove and in the past 15 years I have only seen a company successfully get something back on twice, even this was a small amount directly from a director.
2. You have really signed your own death warrant as you knew that their credit rating was so bad and yet dealt with them (I assume you have insurance but used your override to do the deal and thus are uncovered for the full debt) - it's harsh, but there is a reason why the insurers would have said no.

I guess this company must have been a large % of your sales if it could also bring you down? Is there not a way to shed workforce and get back to basics quickly?

If you are using credit insurance I assume you are selling an actual product and not a service? if so, is it a product that you could get back and if so, do your contracts contain a valid ROT (retention of title) clause? Worth checking.

Sean

[DressingGown]

Thanks you both for your replies.

Yup very aware that getting involved with them in the first place was a big mistake, but it got to a point where we'd try to stop supplying them and they'd threaten to not pay... we shouldn't have let ourselves get in the position in the first place, as you said!

Last order was very recent, about Wednesday, they went into receivership yesterday, and they said their reason for paying was that the bank wasn't letting them at their money... Their flurry of recent orders was also slightly strange which makes me think there was something going on that they knew about.

Yes, selling an actual product, we went to the company and managed to claim about £3k worth of stock, minimal compared to what they've had off us recently, and really like throwing buns at an elephant!

They were our main customer (when they paid!) but we could have survived without their custom, as the turnover was massive with them but profit low. However their debt was huge, and as a workforce of three, including me, cutting back wouldn't do anything...

[seanstevens]

As you have nothing further to lose give them a call and ask them to immediately ask them to give you the name of the receiver as you cannot wait for the official paperwork as you feel you need to report their behaviour to the authorties.

This may upset them (who cares) and they may not want to give you the name straight away (again, who cares), tell them that they may have lost their business but you are fighting to keep yours. You will get an idea if they have a concise or not from this... This is more for personal satisfaction.

Contact the receiver and tell them you believe that the Directors acted improperly in the matter and you would appreciate all the relevant documentation to be sent out quickly so that you can report he matter.

[DressingGown]

Thanks a lot for this info, will do . I really don't care if it upsets them at all, they've been awful to us. I've got my fingers crossed but it looks like the end of the line for us.

[consultant]

Dee,

do your terms and conditions enable you to retain rights of the goods until they are paid for?

If they do, you should be able to get your stock back, to the value of what is owed, if it is 'reasonably' available i.e. in thier warehouse.

One of my companies was hit by this situation with a major electrical retailer and invoking that clause sorted out most of our exposure in a week or two.

You do mention that you have had some stock back, but get to the receivers asap!

[DressingGown]

Thanks, I'll get the receiver's info and contact them as soon as I'm in the office tomorrow, hopefully they'll confirm what we're thinking!

I think that's the terms we've set with them, but our product is such that it has already been used by them and passed on to it's final destination, so we were only able to claim under 10% of unpaid for stock... that's what I was wondering, whether we have any chance of gaining back the value of the remaining 90%...

Glad to hear you managed to keep your company going!

[skeeter]

is there any basic law or legislation that could cover us

I have seen this a few times. In all cases the Administrators wrote to us. In both cases I was shocked. Nothing was said until the letters arrived. Legally I think you have to wait for the Administrators to receive all the money, pay the necessaries, pay themselves, then see what is left. Not sure?

Always found this quite an attractive market actually...especailly in a recession. lol. Sorry...twisted humour.

The Administrators will write in good time.

Approach them direct, they may pay you further up the tree if you have a good sob story...nobody likes business closing. I also believe there is government support for supply chain...never looked. It may be worth looking.

Hope this helps.

[paperman]

Consultant makes a great point, everyone's T's & C's should highlight the fact that YOU retain tile and ownership of ALL goods until paid for in full.

I have first hand experience of taking goods right out of the receivers hands (which they weren't happy about because we had that clause in ours.

If you don't have this you should change them now.