The business carried on. The debt didn’t.

A supplier delivers to the same site, speaks to the same buyer, and sees the same name on the same vans. Its unpaid invoice, meanwhile, has become close to worthless.

When a company enters administration and its trading business is sold, the sale usually transfers assets — the name, the equipment, the contracts, the goodwill — to a buyer. It does not usually transfer the debts. Those stay with the company in administration, and the unsecured supplier becomes a creditor of an entity that has stopped trading, ranking behind several other classes of claim. The business continues. The invoice does not travel with it.

A company and a business are not the same thing

This distinction is the whole article, so it is worth being slow about it. Your contract is with a company: a legal person with a registration number. It is not with a brand, a building, a fleet, a site team or the buyer you speak to every week.

In an ordinary business-and-asset sale out of administration, the administrator sells assets. The trading name is an asset. So is goodwill, the customer list, the plant, the leases, the book debts. All of it can be sold to a buyer, including a company incorporated for the purpose.

Liabilities are not assets. They do not move unless the buyer specifically agrees to take them, which happens occasionally and selectively — a buyer that needs a critical supplier to keep supplying may assume that supplier's balance. It is a commercial choice, not a legal consequence, and most balances are not in that category.

Employees are the exception, and the reason is instructive. Employment law transfers contracts of employment to the buyer on a sale out of administration; the Court of Appeal settled the point in 2011. Parliament decided that employees should travel with the business. It made no equivalent decision about suppliers.

Employees transfer by statute. Suppliers do not.

What happens to an unpaid invoice

The claim stays where the contract was: against the company on the invoice, identified by its registration number. Administration does not move the debt anywhere. It appoints an office-holder over that entity.

What a supplier recovers depends on what survives a queue that forms in front of unsecured creditors:

• Goods still subject to a valid retention of title clause are not part of the estate at all — subject to whether the clause survives resale, mixing or incorporation into a building, which in construction is rarely straightforward.
• Assets under a fixed charge go to the fixed-charge holder.
• The expenses and remuneration of the administration are paid next.
• Preferential claims follow: limited employee entitlements first, then HMRC, which since 1 December 2020 ranks as a secondary preferential creditor for taxes a company collects and holds — VAT, PAYE, employee National Insurance and CIS deductions. HMRC stays unsecured for corporation tax and employer National Insurance.
• Where a floating charge exists, a slice of those realisations — the prescribed part — is ring-fenced for unsecured creditors: half of the first £10,000 of net property and a fifth of the rest, capped at £800,000, or at £600,000 where the first-ranking floating charge was created before 6 April 2020.
• Then the floating-charge holder, and then unsecured creditors, which is where the trade supplier sits.

There is a procedural point that surprises most suppliers. In an administration the administrator generally cannot pay unsecured creditors at all without the court's permission, other than by distributing the prescribed part. Where a dividend does come, it often comes through a subsequent liquidation rather than the administration itself.

Outcomes vary case by case and cannot be generalised. Many administrations return nothing to unsecured creditors. No official average recovery is published, and any figure quoted as one is an estimate.

Operational continuity is not financial continuity

This is where credit teams lose money, and it is not carelessness. Everything a supplier normally relies on to sense that something has changed keeps working perfectly. The site is open. The phone is answered by the same person. The order comes through on the same account, from the same buyer, to the same delivery address. The one thing that changed is invisible from the loading bay.

Old company → administration → creditor claim

Business and assets → buyer or new company → trading continues

The two-number check

Three questions, worth asking whenever a customer's business changes hands out of an insolvency process:

• Which company number is on my unpaid invoices?
• Which company number is on my next order?
• If those are different numbers, what do I actually know about the second one?

The third question is usually the uncomfortable one. A buyer entity incorporated a few weeks ago has no accounts, no filing history and no payment record with anyone. It may be well capitalised and competently run. But the trading history a supplier is mentally crediting it with belongs to a different company — the one that owes the money.

The name on the van is not the number on the invoice.

A sale can complete before creditors are told

Where a sale is negotiated before the administrator is appointed and completed immediately afterwards, it is commonly called a pre-pack. It is lawful and long-established, designed to preserve value that would evaporate if a business stopped trading while a buyer was found. It also compresses the timeline to the point where creditors learn about the sale after it has happened. The administrator must explain a pre-packaged sale to creditors within seven calendar days of the transaction, and the full proposals follow within eight weeks.

Where the buyer is connected to the company — a director, or an associate of one — additional scrutiny applies. Since 30 April 2021, a substantial disposal to a connected person in the first eight weeks of administration requires either creditor approval or a qualifying report from an independent evaluator, stating whether the consideration and the grounds for the sale are reasonable in the circumstances. Two features of that report are worth knowing: the connected person obtains it, not the administrator; and a report concluding that the case is not made does not block the sale — the administrator may proceed, setting out reasons.

None of this is an allegation about any particular transaction, and connected-party sales are a normal part of business rescue. It is the shape of the process. A supplier is better off understanding it in advance than meeting it for the first time in a letter.

The useful warning appears before the transfer

By the time any of this is visible to a supplier, other people have already made the decisions. The order in which it becomes visible is worth knowing precisely, because it explains why the register is not an early-warning system for this event:

• A notice of intention to appoint administrators is filed at court. It is not filed at Companies House and it is not gazetted. It triggers an interim moratorium, so a customer can be under court protection while its suppliers know nothing.
• The appointment itself is filed at court. Still nothing public.
• The Gazette notice follows, required as soon as reasonably practicable. This is usually the first public trace.
• The Companies House notice of appointment follows within seven days of the administrator receiving notice.
• The administrator writes to creditors as soon as reasonably practicable — but only to creditors the company's own records identify. Ledger errors, stale addresses, subcontract chains and group-level accounting mean some suppliers are never on the list.
• The proposals, including the explanation of any pre-packaged sale, arrive up to eight weeks in.

In a pre-pack, the sale completes at the start of that sequence. The register records the event; it does not precede it.

Anything genuinely early has to come from before the sequence starts: new charges registered against the customer, accounts or confirmation statements slipping late, a finance director leaving without a replacement, judgments, a petition advertised in The Gazette, payment behaviour drifting on your own ledger, or a similarly named company incorporated at your customer's registered office with overlapping officers. That last one carries the most false positives — shared registered addresses are usually just accountants — and means something only when it coincides with the others.

One legal detail worth carrying, because it is widely misunderstood: the restrictions on re-using a company's name apply to insolvent liquidation, not to administration. The most common route here sits outside them.

The commercial consequence is blunt. Once a sale is announced, the credit decision is finished and what remains is a recovery exercise with a long queue in front of it. Everything capable of changing the outcome — a tighter limit, shorter terms, a retention of title clause drafted to survive, a deposit, a stop — had to happen while the customer still looked entirely fine. Construction supplies the volume here: 3,805 construction insolvencies in the twelve months to June 2026 in England and Wales, the largest single sector at 17% of cases where industry was recorded.

Watch the entity, not the name

Suppliers are trained to watch companies fail. The harder case is the one where nothing appears to fail at all. The business is rescued, jobs are saved, the customer keeps trading, the sites stay open — and the only thing that ends is the legal entity holding your money.

Rescue and recovery are different outcomes, and the unsecured supplier sits on the wrong side of the difference. That is not an argument against business rescue, which exists for good reasons and preserves real employment. It is an argument for knowing which company you are trading with, continuously, rather than at the point you first had reason to ask.

Grand watches the entity behind the name — filings, charges, officers and judgments — and tells you when it changes. Free checks every month. No subscription required.