Dealing with suppliers, customers and ROT claims

Copyright © 2025 LexisNexis
Produced in partnership with Tom Shepherd of 4 New Square
Practice notes

Dealing with suppliers, customers and ROT claims

Copyright © 2025 LexisNexis

Produced in partnership with Tom Shepherd of 4 New Square

Practice notes
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Although 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

Tom Shepherd
Tom Shepherd chambers

4 New Square

Tom is ranked as a leading junior by Chambers & Partners. He is described as “extremely clever” with “a great deal of commercial acumen” and “a sharp legal mind”. He is “a very good junior”, “not afraid to stand up to judges” and “very personable” (Chambers UK).

Tom has a strong commercial practice with a particular emphasis on fraud, banking and finance, insolvency and professional liability. He has recently acted in significant, high-value litigation as part of larger legal teams, both at first instance and in the Court of Appeal. He also appears in his own right in the High Court and County Courts. He has extensive experience of trial advocacy, including the cross-examination of a variety of witnesses, and as a sole advocate his opponents frequently include more senior practitioners.

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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Retention definition
What does Retention mean?

Retention is a percentage of the sums payable by way of interim payment deducted by the employer and held until completion. Half of the retention is released on practical completion, the other half on the expiry of the defects liability period or issuance of a certificate of making good defects.

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