While sometimes it may not be possible to avoid the domino effect from the collapse of a large-scale construction organization such as Carillion, Manley Construction and Sammon Contracting, from a hardware supplier’s perspective the best protection against insolvency is to try and avoid it happening in the ﬁrst instance by implementing some key safeguards within your ﬁnancial control systems.
In the unfortunate event that one of your signiﬁcant customers becomes insolvent and you receive notiﬁcation of an imminent Creditors Meeting, it is important that you are aware of your rights as a Creditor. A strong voice from Creditor’s at the outset of the liquidation process can dictate how the liquidation is carried on and maximize any potential dividend for the unlucky creditors.
Rights of Creditors
A strong Committee of Inspection has the power to inﬂ uence the course of the liquidation in an effort to ensure the maximum recovery and realisation from the remaining assets of the insolvent company.
While the insolvency of a signiﬁcant customer can often come as a shock, the best protection is to constantly monitor your debtor controls and heed any warning signs. Strict payment terms and the threat of suspension of credit accounts can often be the best form of protection. If you do receive the dreaded notice of the impending winding-up of a customer, it is important to know your rights as a creditor and how to inﬂuence the process as much as possible.
This Business Support article featured in the September/October 2018 edition of The Hardware Journal.