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A company in administration owes us - Where do we stand?

20 September 2017

A company in administration owes us - Where do we stand?

The following question is from one of our visitors to the website: 
My business is under financial pressure because we are owed money by another business that, according to the press, has been issued with a winding up petition by another company that itself is owed a significant amount of money. Again, according to the press, the company having financial problems, has indicated it is 'set to go into administration' and has issued redundancy notices to 75% of its staff. In terms of my business, we were in the process this week of issuing a claim in the court for the debt but I now understand that the debtor is protected from any further legal claims because of this winding up petition. What I need to understand is where does this leave my company in terms of the money we are owed. For example if the company is sold as a viable concern, what would happen to the money we are owed? I would be grateful for any advice you can give. 

If the debtor has been issued with a winding up petition, the directors or the lender can appoint administrators to sell the “business”, the company would most probably then enter liquidation. Or the board may simply allow the court to place the company into compulsory liquidation. As an unsecured creditor, the recovery for your company in either scenario would be either nil or a few pence in the £.
So if you were reliant upon this debtor paying, it is very unlikely you will receive any payment at all for several months. And then it may be a very small percentage.

It could be worth talking to us about the cashflow issues that this might create. We don’t charge for advice and we can arrange for a free face to face meeting with one of our regional managers. He  will help you to consider all the options, set out a plan to deal with cashflow pressures and help you look at how to cut costs. After the meeting, we provide you with a solutions report in writing. Again there is no fee for this report.

Categories: What is administration

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