Understand your company's position and learn more about the options available
A company which owes me money has gone into liquidation
Updated:
How can I reclaim money from a liquidated company?
When a company is liquidated, it ceases to exist as a legal entity. This means that any liabilities (or debts) outstanding at the time of liquidation, are dissolved along with the company. As part of the liquidation process the appointed insolvency practitioner will look to raise as much money as possible from company assets which will be distributed to creditors, however, it is often the case that unsecured creditors unfortunately receive very little from the proceeds.
What to do when a creditor becomes insolvent?
When a company goes into liquidation, its assets are sold by the appointed liquidator in order to repay creditors. Unfortunately, unsecured creditors as a group rarely recoup all the money owed to them because they lie at the bottom of the payment ‘hierarchy’ in insolvency.
This often means there are little, if any, funds remaining after other creditor groups have been paid. If you’re a supplier with a retention of title claim, however, you may be able recover the goods you supplied to your insolvent customer.
Free 60 Second Test
For Ltd Company Directors
What are you looking to do?
Choose below:
What category of creditor are you?
If you have made a loan to the company which is secured against one of their assets, you’re classed as a secured creditor in the event of the company entering liquidation and the appointed insolvency practitioner will ensure you are repaid what you are owed by selling the asset you have security over and distributing the proceeds to satisfy the outstanding amount.
However, if you’re a supplier for the insolvent business, and do not have any security to underpin the loan, you will be an unsecured creditor in the event of liquidation.
Although unsecured creditors in general are unlikely to receive much in the way of return from the liquidation process, there may be actions you can take that could help.
“Shaun really helped me for quick legal advice in a stressful situation where I needed advice QUICK. Called me back within 30 seconds and gave me the advice I needed. Thank you”
Sam
How to submit a creditor claim in liquidation
Initially, you should contact the appointed liquidator and let them know the company owes you money. The liquidator will send you a ‘proof of debt’ form to complete, which includes such details as how much money is owed, how the debt was incurred, and whether you hold any security.
Once the liquidator has received the completed form, and your debt has been registered, they’ll keep you in touch with proceedings and provide updates when necessary. For this reason, it’s important to ensure the appointed liquidator has your current contact details. You’ll also be sent a report detailing how the company became insolvent, estimations of their assets and liabilities, and an estimate of any returns you could expect to receive following the liquidation.
Retention of title clause (ROT)
If you’re a supplier, you may have included a retention of title clause in your contract with the company. If this is the case, you need to inform the liquidator of its existence along with your claim.
A valid retention of title clause could allow you to repossess the goods if it can be proven that ownership remains vested in your business until payment is made by the purchaser. You should notify the liquidator of the clause as soon as possible, and they will send you a retention of title questionnaire.
You’ll need to provide documentary evidence that the retention of title clause exists, and if your claim is upheld you should be able to recover your goods from the insolvent customer.
Can’t pay CBILS or Bounce Back Loan?
Don't worry - there are thousands of other company directors in the same position. If you are struggling to keep up with your Covid loan repayments, speak to a member of the Real Business Rescue team to discuss your options. It's Free & Confidential.
The team are available now - 0800 644 6080
Get a Quote Find Your Nearest Office
Creditors' rights to form a Creditors’ Committee
Creditors have the right to form a creditor’s committee, which generally consists of three or five members. It’s often the case that creditors with the largest claims are nominated, the purpose being to give unsecured creditors a ‘voice’ during the liquidation process.
The committee sanctions various actions by the liquidator, including the office-holder’s remuneration. If a compromise or alternative arrangement needs to be made with creditors, or in relation to the debts owed, the creditors’ committee will be consulted about the new arrangements.
How much of your debt will you recover from the company?
There is no set amount that you may able to receive following the end of the liquidation. Every case of liquidation and insolvency is different, and so are the returns available to unsecured creditors.
The amount available to distribute to creditors will depend upon the level of assets the company had at the time of liquidation, as well as the number and value of creditor claims.
In the event of an insolvent liquidation process, such as a CVL or a compulsory winding up, the only thing that can be guaranteed is that there will not be enough assets available to allow for full repayment of outstanding creditor claims.
Need to speak to someone?
If your company is struggling with unmanageable debts, squeezed cash flow, or an uncertain future, you are far from alone. We speak to company directors just like you every single day, and we are here to give you the help and advice you need.
Call our team today on 0800 644 6080
Real Business Rescue can provide further professional advice tailored to your situation if you’re owed money and this is causing your company to experience financial difficulties itself.
Call one of our experts to arrange a free same-day consultation – Real Business Rescue provide director advice online, over the phone, or in-person at one of our network of UK offices or a place of your convenience.
Further Reading on A company which owes me money has gone into liquidation
Real Business Rescue are here to help
Still unsure whether liquidation is right for your company? Don't worry, the experts at Real Business Rescue are here to help. Our licensed insolvency practitioners will take the time to understand the problems your company is facing before recommending the best course of action going forward based on your own unique circumstances.
- UK’s Largest Liquidators
- 100+ Offices Nationwide
- 100% Confidential Advice
- Supported 25,000+ Directors
Looking for immediate support?
Complete the below to get in touch
Free 60 Second Test
For Ltd Company Directors
What are you looking to do?
Choose below:
We provide free confidential advice with absolutely no obligation.
Our expert and non-judgemental team are ready to assist directors and stakeholders today.
Find your nearest office - we have more than 100 across the UK. Remote Video Meetings are also available.
Free, confidential, and trusted advice for company directors across the UK.