Hi all,

One of our distributors suddenly declared they went into administration overnight, we have a refund due from them but they're offered a credit against their current stock. Is there a way i can ask for the money back rather than the credit? They said a refund cant happen due to them being in administration but i thought that works both ways with giving me credit.

Just making sure they're not having me on.

Thank you

If this company is genuinely in administration, you are only an unsecured creditor.

Unsecured creditors are supposed to be treated equally. This means that the company cannot make full payment to any one particular unsecured creditor (such as yourself) if there is not enough money to pay the company's other creditors too. That would be an unlawful preference and could lead to personal liability for the administrators.

In an administration unsecured creditors often get nothing. Check on Companies House beta to see whether the company is actually in administration, if so it might be best to live with the credit.

Hi thanks for your reply.

The company in question are now trading as another, the director of the company had purchased the same stock from the administrators that were appointed! He has certainly played this one, the credit they are giving is from the new company but can only be used against the same brand of product which i returned for a refund. The director racked up a huge HMRC debt and owed tons of money to manufacturers, i am amazed at how easily he was able to buy back his stock and trade under a new company.

Two were faulty items and one was an opened product.

I've also just checked on companies house, there is no mention of it being in administration. It shows as active, by their emails they went into administration at the start of this month (May)

I see. It is legitimate for company B to purchase the stock from the insolvent company, so long as company B purchases the stock for full market value.

The director may well have been engaging in wrongful trading, but it would only be worth pursuing that if you are owed a significant sum of money.

If the company has given you contact details for the administrator and they are a genuine insolvency practitioner, you could always put in a claim to the administrators - but as an unsecured creditor you might not get anything back unfortunately. Personally I'd take the credit.

Thanks again. I've had an email from the director of which we will talk tomorrow, it's clear he is steering my attention away from the administrators and nor are there any contact details of the administrator on their "legal" document stating that they are in administration.

Nevertheless, i will take the credit due to the high chances of getting nothing back the alternative way.

Your advice is appreciated.