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A GUIDE ON WHAT TO DO WHEN A CUSTOMER GOES INTO LIQUIDATION

Published on:February 22, 2018Author:Liam Wright

“One of my customers has entered into Liquidation and owes me money – will I get my money back?”

Within this blog, Molly Monks, the Corporate Insolvency Manager at The Business Debt Advisor, answers some of the questions raised when business owners find themselves faced with a customer entering into Liquidation.

Term Definition
Liquidator A person appointed to wind up the affairs of a company
Claim Money owed
Creditor To whom money is owing (ie you)
Debtor Someone who owes money (i.e. a customer)
Dividend An amount of money paid to the creditor

Q          Will I get my money back?

A          Receiving a dividend on your claim depends entirely on the circumstances of the Company and the liquidator will be happy to explain this to you. You will be notified of the Company’s situation in writing but don’t be afraid to call the Liquidators office if you don’t understand its contents or you would like further assistance – remember a liquidator acts in the interests of the creditors.

Q          Is there anything I need to do?

A          Yes, you will need to complete a “proof of debt form” this registers your debt within the liquidation. You may want to attach any evidence you have of your debt i.e. an invoice, if you don’t it is a good idea to have it available if the Liquidator requests it.

Q          When do I need to complete the proof of debt form?

A          Generally speaking, you can submit your proof of debt form any time within the Liquidation, unless the liquidator issues his “notice of intended dividend” in which case the notice will include a “final date to prove”  which means you must submit your proof of debt form by that date or risk not receiving a payment on your claim.

Q          Can I claim interest on my debt?

A          Yes, up to the date of liquidation and as long as you would normally charge interest during the course of business (unless the rate of interest is considered “extortionate”).

Q          Can I reclaim VAT from H M Revenue & Customs?

A          Yes can reclaim the VAT on the debt as long as:-

  • you have already paid the VAT on the debt to H M Revenue & Customs
  • the debt must be between 6 months and 4 years and 6 months old
  • you must not have sold the debt on
  • you must not have charged more than the normal price for the item

Q          If they have not paid can I claim the goods back?

A          This is known as “Retention of Title” and I would refer you to my blog “What is Retention of Title?” which will answer your questions.

If your business is struggling with financial difficulties you could benefit by talking to one of our advisors here at The Business Debt Advisor about your options.