Friday 22 October 2010

How do you deal with a company that has entered administration?

If you are in business, and you suddenly discover that one of our customers has entered administration, and they owe you money, are you likely to get paid?. What are the implications for dealing with such companies. If a new company approaches you for business, that is already in administration, do you insist on cash up front?.. Let me know your views!
Posted by at

2 comments:

  1. XL Computers22 October 2010 at 15:28

    This comment has been removed by the author.

    ReplyDelete
  2. XL Computers22 October 2010 at 15:30

    As an unsecured creditor (which the vast majority of suppliers are) you need to recognise that administration may compromise your position. If a company in administration borrows money, the liability for repayment of that debt has priority over the company's existing unsecured creditors (and certain secured creditors). Further, a "Deed of Company Arrangement" (DOCA) is binding on all unsecured creditors, whereas secured creditors voting against it are not bound!!.. So beware when extending credit to a company already in administration!

    ReplyDelete

Subscribe to: Post Comments (Atom)