Frustrated supplier's long wait for payment

VC writes: We received a purchase order from the administrator of a clothing firm in May last year. Our terms of trade demand settlement within 14 days of delivery, but after 16 months we have yet to be paid. The administrator said issues affecting both the amount and the creditors afforded priority under section 19 (5) of the Insolvency Act 1986 were still to be resolved. What can I do?

Answer

Under Section 19 (5) of the Insolvency Act 1986, any sums payable on debts or liabilities, incurred under contracts entered into by the administrator when carrying out his duties, should be paid out of the assets under his control. This takes priority over his remuneration and expenses. Such amounts rank equally with any liabilities relating to contracts of employment adopted by the administrator, who acts as the company´s agent and is not personally liable for any amounts due to you. Any payment you receive will be by a distribution of the assets available. It is unusual for administration-trading liabilities to remain unpaid. We assume the administrator placed the order in good faith, expecting there were sufficient assets available to pay you. Subsequently, issues have arisen about the amounts and status of claims that are given the priority referred to above. Until these are resolved the administrator cannot make any payments. You are entitled to an update on the position and should make your request in writing, with chasing letters as necessary. If an appropriate response is not received, you could report the administrator to his licensing body. For details call the Association of Business Recovery Professionals (020 7831 6563).