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When a company enters liquidation, creditors are often left with many questions and concerns about whether they will recover any money owed. The process can seem complex, and misunderstandings about rights, priorities, and procedures are common.
This article addresses some of the most frequently asked questions creditors have during liquidation, providing clarity on how repayments are handled, the role of liquidators, creditor rights, and what steps you need to take to protect your interests.
Questions and Answers
Do I get anything back?
Not always. While it’s common for unsecured creditors to receive little or no repayment, especially when a company has few assets or secured creditors ahead in line, dividends are paid out in a number of our cases.
If there are sufficient realisations after costs, unsecured creditors can and do receive a return. It depends on the specific circumstances of the liquidation.
I can pressure the liquidator to prioritise my claim?
You may not get your final wages, holiday pay or pay in lieu of notice directly from the company, but you can usually claim from tThe liquidator must follow a strict statutory order of distribution:
- Liquidator’s costs
- Secured creditors with fixed charges
- Preferential creditors (e.g. employee wages, HMRC)
- Secured creditors with floating charges
- Unsecured creditors (everyone else)
- Shareholders (if anything remains)
You cannot “jump the queue” based on urgency or size of debt.
I don’t need to do anything, I’ll be paid automatically?
To receive any payment (if available), you must:
- Keep your contact details up to date
- Submit a formal claim (Proof of Debt form)
- Provide supporting documents like invoices or contracts
Do I have any influence in the liquidation?
While the liquidator has legal control over the process, majority creditors do have influence, especially when decisions require creditor approval.
You may be invited to join a creditors’ committee, which can have a meaningful say in how the liquidation is managed. The committee can approve key actions, challenge fees, and monitor progress.
Does the director pay me if the company can’t?
Directors aren’t personally liable for company debts unless they’ve given personal guarantees or committed misconduct.
Can I go and collect goods if the company hasn’t paid for them?
You can’t just take goods back. However, if the liquidator agrees you have a valid retention of title clause in your contract you will be able to recover any remaining, unpaid goods supplied.
Once a company is liquidated, are directors off the hook?
Directors’ actions are investigated. If there’s misconduct, they can be personally liable or disqualified.
While liquidation can be a challenging and uncertain time for creditors, understanding the process and your rights can help you navigate it more confidently. Remember, repayment depends on the company’s available assets and the statutory order of priority, and you must actively participate by submitting claims and staying informed.
Although liquidators control the process, creditors, especially those with significant claims, can influence key decisions, helping to ensure transparency and fairness. Being proactive and informed is the best way to protect your interests throughout liquidation.