When a company in the UK becomes insolvent and enters liquidation or administration, creditors must take specific steps to recover outstanding debts. Registering as a creditor ensures you are included in the insolvency process and may receive a portion of the company’s remaining assets. Here’s a detailed guide on how to register as a creditor in liquidation or administration case.

Confirming Your Creditor Status

Before taking action, you must confirm that the company owes you money. Creditors can include individuals or businesses with unpaid invoices, loans, or other financial claims against the company. Some creditors, such as secured lenders, prioritise insolvency proceedings more, while others, like trade suppliers, may rank lower in the repayment order.

To support your claim, gather relevant documents, including invoices, contracts, loan agreements, and any correspondence showing that the debt remains unpaid. Having clear records will strengthen your position when submitting your claim.

Identifying the Insolvency Practitioner or Official Receiver

Once a company is declared insolvent, an insolvency practitioner (IP) or official receiver (OR) is appointed to oversee the process. They handle the company’s assets, assess claims, and distribute any available funds to creditors.

To find out who is managing the case, you can check the Companies House website, the Individual Insolvency Register, or public notices published in The Gazette. Once you have this information, contact the IP or OR to register your interest and request further details about the process.

Submitting a Proof of Debt Form

To formally register as a creditor in liquidation, you need to complete a Proof of Debt form.

This document confirms the amount you are owed and provides evidence to support your claim. The form typically asks for your details, the amount outstanding, and supporting documents such as invoices or contracts.

If your claim is under £1,000, you may not need to submit a formal Proof of Debt form, but it is still important to notify the insolvency practitioner of the amount owed. Claims over £1,000 generally require a completed form to be considered for repayment.

Once completed, the form should be sent directly to the insolvency practitioner. Keeping a copy for your records is advisable.

What Happens After You Register?

Once you have registered as a creditor in liquidation, you will receive updates on the case. The insolvency practitioner must keep creditors informed about key developments, such as asset sales, creditor meetings, and potential distributions.

Creditors often have the right to attend meetings and vote on important decisions, including appointing a liquidator or approving a repayment plan. If sufficient assets are available, creditors will receive payments based on the company’s financial position and the legal repayment order.

Understanding the Repayment Order

During liquidation, payments to creditors follow a specific legal order. Secured creditors, such as banks with a mortgage over company property, are paid first. Preferential creditors, including employees owed wages and holiday pay, come next. HMRC has a secondary preferential status for unpaid tax liabilities.

Unsecured creditors, which include suppliers, customers, and contractors, are paid after secured and preferential creditors. Shareholders are the last to receive payments and often do not recover funds. Understanding this order can help creditors manage their expectations regarding potential recoveries.

Creditors in Administration

If a company enters administration instead of liquidation, the process differs slightly. The administration aims to rescue the company or achieve better results for creditors than liquidation would provide. The administrator will assess the company’s financial situation and attempt to sell assets, negotiate with creditors, or propose a company voluntary arrangement (CVA).

Creditors in administration should still submit a Proof of Debt form to the administrator. They will receive updates and may have the opportunity to vote on proposals affecting how debts are handled. If the company cannot be rescued, it may eventually move into liquidation.

Legal Options for Unpaid Debts

If the insolvency process does not result in full repayment, creditors can explore other legal options. Some creditors choose to use debt collection agencies to recover outstanding amounts. If the debt exceeds £750, a statutory demand can be issued, potentially forcing the company into liquidation. Court action is also an option but can be costly and time-consuming. Seeking legal advice before taking further steps is recommended.

Final Thoughts

Registering as a creditor in liquidation or administration is an important step for anyone owed money by an insolvent company. By confirming your status, submitting a Proof of Debt form, and staying engaged, you improve your chances of recovering outstanding debts.

While full repayment is not always guaranteed, taking timely action ensures you are recognised in the proceedings. If you are unsure about any part of the process, seeking advice from an insolvency expert or legal professional can help you understand your rights and maximise your chances of recovery.