Tips on trading with a company in an insolvent process
Tips on trading with a company in an insolvent process

The following Restructuring & Insolvency guidance note provides comprehensive and up to date legal information covering:

  • Tips on trading with a company in an insolvent process
  • Background
  • The supplier's position
  • Administration, administrative receivership and liquidation
  • The position on CVAs
  • Additional issues to consider

Background

This Practice Note gives some guidance on trading with a company that is in a formal insolvency process, such as administration or liquidation of a company voluntary arrangement (CVA). However, for more detailed discussion and guidance on this subject you may wish to refer to the following notes:

  1. A creditor’s guide to dealing with a company in financial difficulty

  2. Dealing with suppliers, customers and ROT claims

  3. Factors the court will take into account when deciding whether to lift or impose a liquidation stay

  4. The moratorium in administration

  5. Tenant/landlord issues—Overview

This Practice Note does not cover the position of landlords, or of directors' personal responsibility during this trading period. For guidance on these issues see Practice Notes: CVAs—landlord issues and remedies and Directors’ duties: companies in financial difficulties.

One point to note is that in an administration, administrative receivership or a liquidation, a supplier will be dealing with the office-holder in any agreement going forward. In a CVA the directors will remain in control and will be the liaison point for the supplier.

Once a company has entered a formal insolvency process, anyone supplying goods or services to the company should review their terms and conditions with the insolvent company in order to ensure they are protected as far as possible, and to maximise their position in the circumstances. There may