Its every freelancer’s worst nightmare. You find an awesome new client, agree on a brief, sign the contract, then one day you phone up to find all the staff have been let go and the MD has fled to the Caymen Islands. What can you do? Sure, you might have a cast-iron contract in place, but if a company no longer exists your contract isn’t worth the paper its printed on.
If the company you are working for goes bust without paying, you become a creditor, which usually means you will have to wait in line behind many other companies to get your share of the insolvent company. To do this you will need to make a formal claim, including copies of any invoices and contracts to support your case.
Although insolvency usually results in disaster, and the money you can recover is often meagre, there can be some silver lining. You may be able to recoup losses by purchasing the failed companies stock or equipment at a reduced price, for example.
If you need more information about how to recover debt in the case of client insolvency, our partners CreditSafe have produced The Creditors Guide to Insolvency, which explains many of the ins and outs in detail. If your client has gone under, you’ll be needing this guide.
