Recovery of Bad Debt from Administrator

Recovery of Bad Debt from Administrator

Posted by John Spratt, on February 26, 2020. Tags: , ,

Acting for a globally known and respected company, we received urgent instructions to advise on the possibility of their being able to recover a bad debt from a national retailer in administration.  The problem was that our advice to the client had to be that the Administrator was not in a position to pay the debt of any creditor from the company’s assets except (a) pro-rata with all other unsecured creditors at the end of the debtor company’s insolvency process or (b) if the payment was necessary in all the circumstances in order to maintain the business of the company in administration under his management pending a possible sale.

Working closely with our client’s management team, and having enlisted the help of a colleague in the insolvency profession, we were able to negotiate and draft an agreement with the Administrator that he would pay the whole of his client’s substantial debt rather than face the consequence of their withdrawing their services from the company in administration. This work was done largely over one weekend, with frequent written communications and many telephone calls.

Our clients were delighted with a wholly successful outcome, which seemed at the beginning to have been against the odds.

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