Debtor Insolvency Response Checklist
When a customer goes under, act fast and methodically: confirm the insolvency type, stop further exposure, lodge your claim correctly, and check whether security like retention of title or the PPSR puts you ahead of unsecured creditors.
What this checklist covers
- Confirm the type of insolvency and who is appointed
- Stop supply and limit further exposure immediately
- Identify any security that improves your position
- Lodge your proof of debt correctly and on time
- Set realistic expectations on recovery
7 min
Before you start
Insolvency has several forms — voluntary administration, liquidation, receivership and others — and your rights differ in each. Start by confirming what has actually happened and who has been appointed, then gather every document that proves the debt and any security you hold.
- Confirm the insolvency type and the appointed practitioner's details.
- Pull all invoices, statements, the contract, and any guarantees.
- Check whether you registered an interest on the PPSR or hold retention of title.
- Stop any further supply to the customer at once.
This is general information only and not legal advice. Insolvency law is technical and deadlines are strict — get professional advice promptly so you do not lose rights.
Protect your position
- Halt all outstanding deliveries and pending work to avoid adding to the loss.
- Locate any goods you supplied that may still be identifiable and unpaid for.
- Check your terms for a retention-of-title clause and whether it was perfected on the PPSR.
- Identify any director's guarantee or third-party security supporting the debt.
- Avoid accepting part-payments or doing deals before you understand the consequences.
The difference between a secured and an unsecured creditor can be the difference between recovering most of the debt and recovering little. Establishing where you stand early shapes everything that follows.
Lodge your claim
- Respond to the practitioner's correspondence and register as a creditor.
- Complete the proof of debt accurately, attaching supporting documents.
- Assert any retention-of-title or PPSR claim clearly and in writing.
- Note any creditors' meeting dates and decide whether to participate or vote.
- Keep copies of everything you lodge and track the deadlines.
A proof of debt that is vague or unsupported can be challenged. Take the time to document the claim properly, and flag any security up front rather than assuming the practitioner will identify it for you.
Common mistakes
- Continuing to supply on credit after learning of the insolvency.
- Missing the deadline to lodge a proof of debt or assert a claim.
- Overlooking a retention-of-title or PPSR registration that would rank you higher.
- Doing side deals or accepting payments that may later be challenged.
- Assuming you will recover the full debt as an unsecured creditor.
If a major customer has collapsed, a free debt appraisal and prompt professional advice will help you act before rights or deadlines slip away.
Key takeaways
- Confirm the insolvency type and stop supply immediately.
- Check for retention of title and PPSR security before lodging.
- Lodge an accurate, well-documented proof of debt on time.
- Get professional advice early — deadlines and rights are easily lost.
Frequently asked questions
Will I get paid if my customer goes into liquidation?
Unsecured creditors often recover little. Whether you do better depends on any security you hold, such as retention of title or a PPSR registration. Get advice on your specific position.
Should I keep supplying a customer in administration?
Generally stop credit supply once you learn of an insolvency to avoid increasing your loss. Any continued dealing should be considered carefully and on advice.
Can I take back goods I supplied but was not paid for?
Possibly, if you have a valid retention-of-title clause that was perfected on the PPSR. This is technical and time-critical, so seek professional advice immediately.
Work the checklist, then get paid
Use the free Invoice Generator, then let Merion recover anything that goes unpaid — commission-only.