A customer has entered administration. Will you get paid?

Administration leaves the old debt unresolved

A labour-hire business receives notice that a customer has entered voluntary administration. The customer owes several weekly invoices and still needs workers to complete current jobs. The owner wants to know whether the old debt will be paid before agreeing to anything else. The immediate task is to separate the existing claim from any new work and understand the information creditors will receive.

Establish the account at appointment

List what was supplied before the appointment and reconcile the unpaid amount. Keep subsequent requests separate. Include the relevant orders, timesheets, approvals and payments so the administrator can understand the claim.

Confirm the contracting company's identity and the administrator's verified contact details. Send records through the stated process and retain an acknowledgement. Do not rely solely on an old accounts contact saying your name is already on the list.

Understand what is still undecided

ASIC explains that creditors consider the company's future during administration. An administration notice is not a promise of full repayment and is not identical to a liquidation notice. The available outcome depends on the process and proposals.

Read the administrator's report and any proposal carefully. Focus on the expected return, timing, assumptions and risks relevant to your claim. If a forecast is unclear, ask a specific question rather than treating the most optimistic number as an assured receipt.

Source: Voluntary administration: A guide for creditors — ASIC

Keep new supply on separate terms

Do not continue under an informal request from the old management team without confirming authority. Ask how new orders must be approved and how payment will be handled. Keep old invoices and new authorised supply distinct in the ledger.

Have any proposed terms reviewed where the exposure is significant. Continued trading may be part of the administration, but it does not automatically make your earlier account payable in full. A new order should be assessed on its own documented basis.

Participate while protecting your cash

Check the claim, proxy and meeting documents for required actions and dates. Make sure the person attending or voting has the necessary authority. Ask for help if the proposal or treatment of your debt is unclear.

At the same time, plan your own commitments without assuming a particular distribution. Consider replacement work and any effect on wages or suppliers. The best immediate outcome is an informed creditor position and a business that can withstand the uncertainty while the process develops.

Separate creditor participation from new work

Reconcile the pre-appointment claim and submit the requested evidence.

Read the proposal and note questions about return, timing and assumptions.

Approve any new work only through the administrator's stated ordering process.

Call CRP today about understanding a customer's administration and coordinating your creditor response.