What to do when your debtor goes bankrupt
What to do the day your customer ends up in the bankruptcy court — and why most creditors do it too late.
You know how to file the claim, where in the queue you stand, and what you can realistically expect to recover.
Step by step
- 01
Stop delivering immediately
The first move is not to collect — it is to stop the bleeding. Keep supplying a company in bankruptcy and you simply increase the loss, and no one is going to pay for it.
- 02
File the claim with the trustee
The claim must be filed in the bankruptcy estate together with documentation: the invoice, the agreement, proof of delivery and a statement of the amount. A filing without supporting documents is an assertion, and the trustee can reject it.
This is where it goes wrongThere are deadlines for filing. Miss them and the claim can be rejected — even if it is entirely justified.
- 03
Work out where in the queue you stand
The order of priority decides everything. Some claims are preferential; most supplier claims are unsecured claims and stand at the very back. If there are not enough funds, the unsecured creditors get nothing — that is not unfair, that is the system.
- 04
Check whether you hold security — or can repossess the goods
If you have retention of title, a charge or a guarantee, you are not an unsecured creditor. That is what the security is for, and it is what decides whether you get something or nothing.
- 05
Look at whether anyone is personally liable
If a guarantee has been given, or if you are dealing with a sole proprietorship, the claim is not necessarily dead just because the company is. There may be a person to pursue instead.
This is where it most often goes wrong
Not because anyone is careless, but because the mistakes are easy to make and only surface once it is too late.
You find out about the bankruptcy too late
Credit monitoring is cheaper than the loss. Whoever is told on the day can still stop the delivery — whoever hears it from a colleague three weeks later cannot.
You file the claim without documentation
The trustee is not your opponent, but he has to be able to see that the claim is real. Missing documents are the most common reason a claim is rejected.
You write the whole thing off straight away
There is a difference between a company with no funds and a person who is liable. And even an empty estate can turn out to hold funds — for example if the trustee avoids payments made to other creditors.