When a customer enters administration, suppliers join the queue of unsecured creditors. Across 433 UK administrations, most of that queue received nothing. Here is what happens and what to do.
The email usually arrives from someone you have never heard of. A firm of accountants writes to say it has been appointed administrator of one of your customers, and that you are listed as a creditor.
For most suppliers, that letter is the first and last official word on the money. We have read the administrators' reports for 433 recent UK administrations, and the pattern is consistent: the debt owed to ordinary trade suppliers is rarely paid, in part or in full.
This article explains why, what you can still do in the first few days, and how to make sure the next letter costs you less.
A supplier who delivered goods or services and has not been paid is, in the language of insolvency, an unsecured creditor. You hold an invoice, but no security over any of the customer's assets.
When a company enters administration, its assets are sold and the proceeds are paid out in a fixed order set by law. In England and Wales the order runs roughly as follows:
Trade suppliers sit sixth of seven. By the time the queue reaches them, the money has usually run out.
Every administrator must file a report setting out what went wrong and what creditors can expect. Across the 433 UK administrations we have analysed from 2025 and 2026:
Not a few pence in the pound. Nothing.
The named cases make the same point. Avtar Construction, a Swindon groundworks contractor with around £20m of turnover, left more than 250 subcontractors and suppliers owed £4.4m, with nothing expected back. Devonshire Homes had traded since 1984 and built 2,000 homes. Its administrators reported more than £35m owed to unsecured trade creditors, who are unlikely to receive a penny. Torsion Construction turned over £165m in 2025. A year later its suppliers and subcontractors were owed at least £15.6m, which the administrators described as highly unlikely to be paid.
None of these looked like a risky customer the year before. That is the uncomfortable part of credit risk. Fragile customers get watched and chased. The established name with the good reputation gets open terms and patience, right up until it stops paying.
Not every unpaid invoice ends in administration. Sometimes the customer has the money and simply decides not to pay.
One of our clients, a specialist building subcontractor, was owed more than £60,000 of overdue invoices by a property developer. The developer never complained about the work. It just did not pay, and it made clear that if our client went to court, it would answer with counterclaims and tie the case up in legal costs until a smaller firm gave up. That tactic works on a lot of suppliers, because the cost of a court fight usually favours the bigger party.
It did not work here, because the debt was insured. Allianz Trade, the credit insurer, chased the developer for several months. When its lawyers' letter before action went unanswered, it filed a winding-up petition against the developer, and the insurer covered the legal costs. Only then did a "dispute" appear, in a letter from the developer's solicitors, after months of chasing in which none had been raised. The insurer held its ground. Two weeks after the petition was filed, and the day before the developer's application to strike it out was due to be heard, the developer paid the debt in full, with interest and costs.
Our client spent nothing on lawyers and never had to decide whether the fight was worth it.
In 42% of the administrations we analysed, the business was sold within days of the appointment, often to a company linked to the former management. This is a pre-pack.
For suppliers, it is easy to misread. Clayton Glass, the County Durham glass processor founded in 1956, entered administration in September 2026 and was sold straight away to a company led by its former management. Four of its seven sites kept trading. The same people answered the phone and the orders kept coming.
But the debts stay behind in the old company. Anything owed before the appointment joins the unsecured queue, while the new owner starts with a clean sheet. When a customer sells out of administration, the relationship usually survives. The old invoices usually do not.
If you keep supplying the new business, treat it as a new customer: new account, fresh credit checks, and terms that reflect the fact it has no trading history of its own.
You will not change the order of the queue, but you can make sure you are in it, and recover what is legitimately recoverable.
Every open invoice is a loan. You earn no interest on it and you hold no security for it. Most businesses would never lend a customer £50,000 unsecured without thinking hard about it, yet they do exactly that every month through their trade terms.
Three questions are worth asking of your own ledger:
There are three broad ways to carry the answer. You can absorb the loss and hope it is small. You can tighten terms and accept that some customers will go elsewhere. Or you can move the risk to someone whose job is to carry it.
That last option is what trade credit insurance does. The insurer sets a credit limit on each customer, monitors them while you trade, and pays out a large share of the debt, usually around 90%, if an insured customer becomes insolvent or simply fails to pay. It turns a loss you cannot predict into a cost you can budget for, and it puts you outside the unsecured queue in practice even when you remain in it on paper.
If you would like a quick view of one of your customers, our free Buyer Assessment tool is a good place to start. If you would rather talk it through, get in touch.
