A Customer Has Entered Administration

The scenario

A customer with an outstanding balance has entered voluntary administration. You may have received a circular from the administrator, or you may have found out by chance. Either way, the company is now under the control of an independent practitioner whose job is to assess whether the business can be saved, sold, or must be wound up. Your invoices are still owed — but how you pursue them has fundamentally changed.

This is a moment to stop your normal collection activity and switch to the formal process, because continuing to chase the company directly is now usually both pointless and inappropriate. What you do in the first days can affect how easily your claim is admitted later.

What's really going on

When an administrator is appointed, control of the company passes from its directors to the practitioner, and a form of breathing space generally applies. Demands, deductions and enforcement against the company typically pause, and creditors are dealt with collectively rather than individually. The administrator investigates the company's position and reports to creditors, who usually vote on its future at a meeting.

As an unsecured trade creditor you are, realistically, near the back of the queue. The administrator will write to known creditors, ask you to verify your debt, and invite you to lodge a proof. Whether you recover anything — and how much — depends on the assets available and the outcome of the process. Your influence is limited, but lodging a clean, well-evidenced claim and engaging constructively is the best use of your energy.

Your options

• Stop direct collection. Cease demands and enforcement against the company and deal with the appointed administrator instead.
• Verify and lodge your claim. Respond to the administrator's request, prove your debt, and lodge a proof when invited.
• Gather your documents. Pull together invoices, statements, the contract, and any security or guarantee paperwork now.
• Check any security or guarantee. Retention of title, a PPSR registration or a director's guarantee may give you a route the unsecured queue does not.
• Attend or vote at the creditors' meeting. Engage with the process, as the outcome is usually decided by creditors.

Recommended approach

Switch immediately from collection mode to claim mode. Stop chasing the company directly — it will not help and can be inappropriate once an appointment is in place — and instead respond promptly to the administrator, verify your debt, and lodge your proof when invited. Pull your invoices, statements, contract and any security or guarantee documents together now, while they are easy to find, because a clean, well-evidenced claim is easier to admit.

Then look beyond the unsecured queue. If you hold retention of title, a valid PPSR registration, or a director's personal guarantee, you may have a route that does not depend on the company's assets at all — and that is worth assessing quickly. For the practical steps of proving a debt and engaging with an administrator, the Academy lesson library covers the process, and you can refer the matter if you would prefer specialist help managing the claim and any security.

What to avoid

Do not keep sending demands or trying to enforce against the company after the appointment — it is usually futile and can be improper. Avoid assuming your debt is simply written off; it remains owed, and you may still recover something through the process or through security. Never sit on your documents — gather and lodge promptly, because deadlines apply and a late or thin claim is easy to overlook. This is general guidance, not legal, financial or tax advice. Insolvency is technical and the right response depends on the appointment type and your position, so obtain specialist advice.