How to Claim Money Owed by a Company in Liquidation
Write to the insolvency practitioner named in the Gazette notice, submit a proof of debt for the amount owed as at the date of the appointment, and attach the invoices, terms and delivery evidence that support it. It takes an hour. Whether it produces a dividend is a different question — and the honest answer is usually no.
The five steps
1. Identify the office holder and the procedure
Every corporate insolvency appointment in the UK is advertised in The London Gazette. The notice tells you which procedure has been used, when it started, and who has been appointed. That matters, because a liquidator, an administrator and a supervisor of a CVA handle claims differently, and the date of appointment is the cut-off used to calculate your debt.
2. Calculate the debt as at that date
Your claim is the amount owed to you when the procedure began, including VAT, plus any interest or late payment compensation already accrued. Then apply set-off: if you also owe the company money, the two are netted automatically and you claim only the balance. Getting this wrong is the most common reason a claim gets queried.
3. Gather the evidence
Unpaid invoices, your terms and conditions, purchase orders, signed delivery notes or timesheets, statements, and the emails chasing payment. Send it all at once. A claim that arrives complete is admitted; a claim that arrives as a bare figure generates a query and sits in a pile.
4. Submit the proof of debt
The office holder will normally send a proof of debt form, or you can request one. If no form is provided, set out the same information in a letter. Email is almost always accepted. Keep a copy of what you sent and the date you sent it.
5. Answer queries, then wait
Respond promptly to anything the office holder asks. After that the case runs on its own timetable and there is little you can do to speed it up. You are entitled to receive progress reports, and to be told if your claim is rejected and why.
What goes in a proof of debt
A proof of debt is short. It is not a legal pleading and you do not need a solicitor to complete one. It should state:
- Your full business name, address and contact details, and your company number if you trade through a limited company.
- The total amount claimed as at the date of the insolvency, including VAT.
- What the debt is for — goods supplied, services rendered, rent, a judgment debt, and so on.
- Whether you hold any security, and if so what it is and what you value it at.
- Whether you are asserting retention of title over goods still on the premises.
- Any amounts you owe the company, so set-off can be applied correctly.
- Whether the debt carries any preferential element — relevant mainly if you were an employee.
- Details of any personal guarantee you hold from a director, which you can pursue separately.
Flag retention of title in the first line, not the last. If you supplied goods that are still on site, unsold and identifiable, that claim is worth far more than a place in the unsecured queue — and it evaporates once the stock is sold. Raise it separately and immediately rather than burying it in a proof of debt that may not be opened for weeks.
The evidence that gets claims admitted
Office holders work from the failed company's own books, which are frequently incomplete, out of date, or simply wrong. If your figure and theirs do not agree, the burden of showing yours is right sits with you. These are the documents that settle the argument:
The order and the terms
A purchase order or signed contract, plus the terms and conditions that applied when the order was placed. This is also what proves a retention of title clause was incorporated.
Proof of delivery
Signed delivery notes, signed timesheets, or a sign-off email. A disputed debt usually turns on whether the goods or work were actually accepted, not on the invoice.
A reconciled statement
A ledger running to the date of appointment showing invoices raised, credits and payments received. This is what lets the office holder tie your number to theirs quickly.
The chase correspondence
Emails demanding payment serve double duty: they show the debt was live and undisputed, and they are your defence if a preference claim is later made against a payment you did receive.
Deadlines that actually matter
There is no single cut-off at the start of a case, which lulls creditors into leaving it. There are three points where timing genuinely bites:
The last date for proving
Before paying a dividend, the office holder gives notice of an intended dividend with a last date for proving at least twenty-one days ahead. A proof received after that date cannot disturb a dividend already declared, though it may share in later ones. Watch your post and your spam folder.
Voting on decisions
To vote on the appointment of a liquidator, on a CVA proposal, or on the formation of a creditors' committee, your claim has to be in by the deadline in that particular notice. Miss it and you have no say in who runs the case.
Challenging a rejection
If your claim is rejected in whole or in part you get written reasons and a short window — usually twenty-one days — to apply to court. In most cases the better first move is to write back with the missing document rather than to litigate.
Separately, keep the general six-year limitation period for contract debts in mind if you are dealing with an old invoice, and remember that a personal guarantee against a director runs on its own timetable entirely — it does not stop because the company has been liquidated.
What to expect, honestly
We would rather tell you this plainly than have you plan around a number that never arrives. Money in an insolvency is applied in a fixed statutory order, and an ordinary supplier sits near the end of it: the costs and expenses of the insolvency come first, then preferential creditors such as employees and HMRC for taxes it collected on its behalf, then the ring-fenced prescribed part, then any floating charge holder, and only then unsecured creditors.
A large proportion of liquidations return nothing at all to unsecured creditors. Where a dividend is paid it is commonly a few pence in the pound, and it typically arrives a year or more after the appointment. Submit the claim — it is an hour's work and costs you nothing — but write the debt off in your own forecast today.
Recoveries that do not depend on the claim
Because the dividend is so often nil, the recoveries worth your attention are the ones that sit outside the insolvency altogether:
- VAT bad debt relief — reclaim the VAT you already paid over on the unpaid invoices, independently of the liquidation.
- Corporation tax relief on the written-off debt.
- Retention of title — your goods back, if the clause was properly incorporated and the stock is identifiable.
- Personal guarantees — enforceable against the director personally, and unaffected by the company's liquidation.
- Credit insurance — subject to short notification windows, so check the policy today.
If you believe the directors traded on knowing the company could not pay, you can report that conduct to the Insolvency Service. It will not get your money back, but it does feed into whether those directors are allowed to run companies in future.
Frequently asked questions
What is a proof of debt?
The formal statement of your claim: who you are, how much you are owed at the date the procedure began, what the debt is for, whether you hold security or retention of title, and the evidence supporting it. The office holder uses it to decide which claims are admitted, for voting and for any dividend. It is usually a short form and can normally be emailed.
Is there a deadline for claiming?
Not at the outset, but there is a hard one before any dividend. The office holder must give notice of an intended dividend with a last date for proving at least twenty-one days ahead. A late proof cannot disturb a dividend already declared. Submit as soon as the appointment is announced.
Do I need to claim for a small amount?
Not always. Small debts — currently up to one thousand pounds — can be treated as proved from the company's own records without a formal proof, after the office holder writes to you with the amount they propose to admit. Check that figure, because it comes from the failed company's books. If it is wrong, say so in writing.
How much will I actually get back?
Often nothing, and where a dividend is paid it is frequently a few pence in the pound arriving a year or more later. Unsecured creditors rank behind the costs of the insolvency, preferential creditors, the prescribed part and any floating charge holder. Submit the claim, but do not forecast on it.
What if my claim is rejected?
You get written reasons and usually twenty-one days to apply to court. Most rejections come from a gap in the paperwork rather than a real dispute, so write back with the missing document first — an unsigned delivery note or a figure that does not reconcile is usually all it is.
Can I claim interest?
Interest and late payment compensation accrued up to the date of the insolvency form part of your claim. Interest running after that date ranks behind all unsecured principal claims and is paid only where there is a surplus — which in most insolvencies makes it academic.
Is the write-off bigger than the claim?
If losing this money leaves a hole in your own cashflow, that is the more urgent problem — and it is the one where acting early actually changes the outcome. K2 has advised UK directors since 1990 and will give you a straight answer about where you stand.
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