Dealing with suppliers, customers and ROT claims
Produced in partnership with Tom Shepherd of 4 New Square
Practice notesDealing with suppliers, customers and ROT claims
Produced in partnership with Tom Shepherd of 4 New Square
Practice notesAlthough suppliers are generally unsecured creditors (unless they establish a valid retention of title (ROT) claim) they may be key to a successful turnaround or pre-pack sale. Equally, the support of customers is often an essential part of a successful turnaround business plan.
In this Practice Note, we discuss how a company in financial difficulties should deal with a variety of suppliers and customers, and how to approach ROT claims put forward by suppliers.
Suppliers
The initial due diligence on the company will identify key suppliers, ie those who are sole suppliers of products/services essential to the business or where there would be a long lead time to switch suppliers (eg credit card machines, IT systems or computer and accounting software often embedded into the company's business). The company will prioritise dealing with these suppliers through a proper communications plan.
Suppliers providing non-key products/services and those charging excessively (where contracts will need to be renegotiated or replaced by cheaper suppliers) will be dealt with separately.
Ideally, the company will pro-actively reach
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