Can a company in receivership or administration still send invoices, and do you have to pay?

Can a company in receivership still send out invoices?

Yes. Insolvency does not stop a company issuing invoices, and the Insolvency Act 1986 tells you what they must say:

• Receivership: every invoice, order, business letter and order form, and the company's websites, must state that a receiver or manager has been appointed (section 39).
• Administration: every invoice, order, business letter and order form, and the company's websites, must give the administrator's name and state that the company's affairs, business and property are being managed by the administrator (Schedule B1, paragraph 45).
• Liquidation: every invoice, order, business letter and order form, and the company's websites, must state that the company is being wound up (section 188). This applies to compulsory and voluntary liquidations alike.

Leaving the statement off is an offence for the people responsible, so an invoice from a company you know is insolvent that carries no such statement is a reason to stop and ask who issued it before you pay.

Common reasons an insolvent company is still invoicing you:

• An administrator is still trading the business while looking for a rescue or a buyer.
• A liquidator is collecting money that was owed to the company before it failed, or finishing work so far as that helps the winding up.
• A receiver appointed over a property is collecting the rent. If you rent premises from a company whose lender has appointed a receiver, this is why a "receiver" may write to you.

Can a company in administration still trade?

Yes. An administrator must aim first to rescue the company as a going concern, unless that is not reasonably practicable, and the powers the Insolvency Act gives an administrator include the power to carry on the company's business. An administration that keeps trading keeps invoicing.

A liquidator can carry on the business only so far as that is necessary for its beneficial winding up, so a liquidator trades to help wind the company up, not to keep it going. A receiver's reach depends on the appointment: an administrative receiver (now restricted, see below) has the same Schedule 1 powers as an administrator, while a receiver appointed over one asset, such as a building, deals only with that asset.

Do you have to pay a company in administration or liquidation?

Yes, if you genuinely owe the money. The moratorium in an administration, and the freeze on legal action after a winding-up order, protect the company from its creditors. They do nothing to protect the company's customers from paying what they owe. Collecting those debts is part of the office-holder's job: an administrator has the power to collect and get in the company's property and to sue in the company's name, a liquidator in a court winding up must take control of everything the company is entitled to, and liquidators can sue in the company's name too. Ignoring the invoice can end with the office-holder suing you for it.

An insolvent company's invoice is no more binding than any other, though. If the work was faulty, the goods never arrived or the price is wrong, dispute it in writing with the office-holder exactly as you would have with the company.

Who do I pay: the company, the receiver or the administrator?

Pay the office-holder, into the account they nominate, and keep their letter with your payment record. To check who the office-holder is:

• An administrator must publish the appointment in The Gazette as soon as reasonably practicable and tell Companies House within seven days.
• A voluntary liquidator must publish the appointment in The Gazette and file it at Companies House within 14 days. When the court makes a winding-up order in England and Wales, the Official Receiver becomes liquidator automatically until someone else is appointed.
• A lender that appoints a receiver under its charge must tell Companies House within seven days.

Confirm any change of bank details with the office-holder using contact details from the official notice, not from the email that asked you to pay. An LPA receiver appointed over a property can collect that property's income, such as rent, which is not the same as every debt owed to the company, so if a receiver asks you to pay something unconnected with the property, ask them to confirm in writing what they were appointed over.

Do I have to pay a debt to a company in administration if it owes me money too?

This is where suppliers have the strongest hand. When you and the insolvent company owe each other money from dealings before the insolvency, the Insolvency (England and Wales) Rules 2016 set the debts against each other and only the balance survives:

• In a liquidation, set-off is automatic. An account is taken of what each side owes the other; if the balance is in your favour, you prove for that balance only, and if it is in the company's favour, you pay that balance to the liquidator (rule 14.25).
• In an administration, the same netting off applies once the administrator has given notice that they intend to make a distribution to creditors, with the account taken at the date of that notice (rule 14.24). Before that point, the insolvency rule does not apply, and whether you can hold back payment depends on your contract and the general law. Take advice before withholding money from an administrator.

A worked example with invented figures: you bought £8,000 of stock from a company you also do haulage for, and it owes you £5,000 for that haulage, all before it went into liquidation. You do not pay £8,000 and then queue as an unsecured creditor for your £5,000 (which might return little or nothing). You pay the liquidator the £3,000 balance. Had the figures been the other way round, you would prove for £3,000 and pay nothing.

Set-off has limits. It does not cover debts from obligations taken on after the company entered administration or liquidation, or at a time when you already had notice that the insolvency was coming (for example a pending winding-up petition, or a notice of intention to appoint an administrator), or debts you bought from someone else in that window. The insolvency set-off rules apply to administration and liquidation, not to receivership, so if you owe money to a company in receivership, take advice before setting off.

Can you invoice a company in administration?

You can send it, but for anything supplied before the appointment, an invoice will not get you paid in the normal way. While the company is in administration, no legal proceedings can be started or continued against it without the administrator's consent or the court's permission, and after a winding-up order no action can be started or continued against it without the court's leave. The route for an old invoice is a proof of debt to the office-holder, which our guide on what happens to your invoice in administration or liquidation explains step by step. For anything new the administrator asks you to supply, agree in writing who is ordering it and how and when you will be paid before you deliver.

What happens if a company goes into administration and owes you money?

Your unpaid invoices become an unsecured claim: you lodge a proof of debt, and the insolvency expenses, preferential debts and secured lenders are paid ahead of you, so unsecured creditors share whatever is left. Retention of title, VAT bad debt relief and voting on the administrator's proposals can all improve your position, and the administration and liquidation guide covers each one. If you also owe the company money, read the set-off section above first: it may be worth more than the rest put together.

Should I keep supplying a company in receivership or administration?

Only on terms that get you paid for the new supply. You usually cannot end a supply contract just because the customer has entered administration or liquidation, and you cannot make paying your old invoices a condition of supplying it now. These rules also apply where an administrative receiver has been appointed, but not to a receiver appointed over a particular property, such as an LPA receiver; there your contract decides, so take advice before relying on it either way. What you can do is agree with the office-holder, in writing and before you deliver, how the new supply will be paid for. The administration and liquidation guide covers the rules on stopping supply in more detail.

Receivership vs administration vs liquidation: what is the difference?

People use "receivership" loosely for any insolvency. Legally they are different things:

• Receivership: a secured lender appoints a receiver to recover its loan from the assets it holds security over, which may be the whole business or just part of it. The old form, an administrative receiver over the whole company under a floating charge, cannot be used for floating charges created on or after 15 September 2003, apart from a few specialist exceptions. What remains available to most lenders is receivership of particular property: a fixed-charge receiver appointed under the lender's charge document or, in England and Wales, an "LPA receiver" appointed under the Law of Property Act 1925, who acts as the borrower's agent and can collect the property's income.
• Administration: an administrator takes control of the whole company, aiming first to rescue it as a going concern or, where that is not reasonably practicable, to get creditors a better result than an immediate liquidation would.
• Liquidation: the company is wound up and its assets are sold for its creditors. In a compulsory liquidation in England and Wales the Official Receiver becomes liquidator when the order is made, so a company "with the Official Receiver" is in liquidation, not receivership.

This guide describes the law in England and Wales. In Scotland, receivers have their own chapter of the Insolvency Act 1986 (sections 50 to 71, with the invoice statement in section 64), there are no LPA receivers, and Scottish insolvencies follow separate Scottish insolvency rules, so the rule numbers above do not apply there. Northern Ireland has its own legislation, the Insolvency (Northern Ireland) Order 1989 and the Insolvency Rules (Northern Ireland) 1991, so the section and rule numbers above do not apply there either, and there are no LPA receivers because the Law of Property Act 1925 extends to England and Wales only. As in England and Wales, the Official Receiver becomes liquidator when the court makes a winding-up order, unless the court instead appoints the outgoing administrator or the supervisor of a voluntary arrangement.

Why does the date the insolvency started matter?

Almost every answer above turns on dates: which dealings came before the appointment and so can be set off, which supply was ordered by the office-holder, and when you first had notice that the insolvency was coming. Kestrel Alert emails you when an administration or liquidation of a company on your watch list is filed at Companies House or published in The Gazette, with a link to the official record, so you have the date and the notice in front of you when you work out what to pay. It also flags the warning signs worth knowing about, such as overdue accounts and new charges.

This guide is general information, not legal advice. Set-off and payment disputes with an office-holder can turn on small facts, so for a significant sum speak to a solicitor or insolvency practitioner before you pay or withhold.