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The money is owed.
The debtor is failing.
Move first.

When a debtor nears insolvency, recovery becomes a race. The creditors who act while the company still trades recover far more than those who wait for the formal process to begin. This is the sequence.

Step 1: Confirm the risk before you act

Pull the debtor's profile and check the live signals: CCJs, winding-up petitions, overdue filings, charges and the trajectory of the R-Score. If a winding-up petition has already been advertised, the position changes completely, and you should get professional advice immediately.

Step 2: Secure what you can, while it is solvent

While the company still trades, you can negotiate. Call for payment, propose a payment plan in writing, or ask for a charge or personal guarantee in exchange for continued supply. An unsecured claim in a later liquidation is worth pence in the pound; a negotiated settlement now is worth the full amount.

Step 3: Serve a statutory demand

A statutory demand is a formal written demand for payment of a debt over £750. If the company ignores it for 21 days, that failure is grounds for a winding-up petition. It concentrates attention, and it costs little to serve. But be aware: if you petition and the company is liquidated, you become one unsecured creditor among many.

Step 4: If insolvency begins, register immediately

When an administrator or liquidator is appointed, write to them with your claim, invoice references and amounts. Respond to every request for proof of debt. Creditors who register late, or not at all, are paid last or not at all.

Step 5: Know where you stand

The order of payment in an insolvency is fixed by law:

  • Secured creditors with fixed charges, against the specific asset charged.
  • Costs of the insolvency itself.
  • Preferential creditors, mainly employee wages and holiday pay.
  • Secured creditors with floating charges.
  • Unsecured creditors: most trade suppliers sit here.
  • Shareholders, last.

Unsecured creditors are paid from what remains, which in many liquidations is little. That is the argument for acting before the process starts, not inside it.

One caution
If a debtor that owes you money pays you shortly before going into liquidation, the liquidator may claw the payment back as a preference if it put you ahead of other creditors. Keep records of every exchange.

This guide is general information, not legal advice. For claims of any size, take advice from a solicitor or licensed insolvency practitioner.

The earlier you see the insolvency signals, the earlier you can act. Watchlists on Black Flag Alert notify you the moment a debtor's record changes.

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