Member of BTG Global Advisory

Assistance for Creditors with Retention of Title Claims

Retention of Title can be a complex affair unless the clause is unambiguous in its content, and delivered in a manner that cannot be disputed by the debtor. It often forms part of a written contract between the supplier and their purchaser, and is likely to have been discussed at some point during negotiations.

A problem can arise, however, when a creditor assumes that they have a right to reclaim unpaid stock, but the debtor company refuses to recognise the clause, or claims to have no knowledge of its existence.

Begbies Traynor has wide experience in this area, and can work on behalf of creditors attempting to enforce a retention of title claim.

But what can creditors do to enforce a claim they make against an insolvent debtor? The Official Receiver or insolvency practitioner appointed to deal with the insolvency will request more information:

Documentary evidence

Documentary evidence could take the form of a contract that includes the clause, signed by both parties, and would provide irrefutable proof that the creditor has a valid claim. Sometimes a clause is included in an invoice specifically sent before the goods are delivered, and incorporates a statement that receipt signifies acceptance of all terms.

In some cases a document may not have been signed by the debtor, but the retention of title issue was pointed out to them as an available route should the purchasing company become insolvent.

Although some industries commonly use retention of title to protect suppliers, it is always the responsibility of the creditor to provide the information needed to prove its existence.

Retention of title questionnaire

This is an important document that allows creditors to explain the circumstances of their claim, why the clause was introduced, and their expectations in recovering the stock. This helps to establish a creditor’s rights to ownership, and allows the Official Receiver or appointed IP to fully understand the background to their claim.

The content of this questionnaire can take various forms, and is designed to cover different business scenarios. The office-holder will use their knowledge of each case to tailor the questions, extracting the information needed to make a sound decision.

Potential issues surrounding a retention of title clause

Without a detailed retention of title clause that addresses all potential issues, it is unlikely that creditors will see success in their attempts to recover unpaid stock. There are various issues inherent in this system that reduce the chances of a beneficial outcome for suppliers.

These include:

  • The customer selling the goods to a third party
  • Processing the goods in some form
  • Using them in the manufacture of another product
  • Using the goods to make a new product, and then selling that product to a third party

Clearly, the possibility for rejection of a claim is very high. This is a complex area that requires professional input when the clause is first formulated, as well as when attempting to reclaim stock.

It is a good idea to contact the liquidator as soon as you know the purchaser is insolvent. Along with a covering letter, you should send a copy of your terms of trade, a statement showing the extent of their debt, and copies of any relevant invoices.

Begbies Traynor can advise on all aspects of retention of title, from the wording of a clause to the inclusion in a contract or other document. We operate from offices around the country, and can arrange a same-day meeting with one of our licensed IPs. 

Contact our team

Latest News
York taxi company placed into administration
York taxi company placed into administration
On 25th November 2016, Rob Sadler and Dave Broadbent of Begbies Traynor in York were appointed as joint administrators of Six Five Nine Cars Ltd. The business, which has traded in York for over 15 yea…
40 jobs saved as gaming retailer sold out of administration
40 jobs saved as gaming retailer sold out of administration
Administrators of a South West-based gaming retailer have succeeded in saving 40 jobs at the company after securing the sale of the business, including 12 out of 15 of its High Street stores. Business…
Nearly 100 jobs saved as bars and restaurants are sold out of administration
Nearly 100 jobs saved as bars and restaurants are sold out of administration
Almost 100 jobs have been saved by the successful sale out of administration of a number of Midlands bars and restaurants. Town and Country Inns plc appointed business recovery and rescue specialists …
Begbies Traynor opens new office in Taunton
Begbies Traynor opens new office in Taunton
The UK's leading independent business recovery practice, Begbies Traynor, has opened an office in Taunton.  The move will enable the firm to build on work it has already done in the town and with the…
Brexit uncertainty puts the brake on London businesses
Brexit uncertainty puts the brake on London businesses
New research reveals that British businesses from Land's End to John o' Groats have shown surprising resilience since the EU Referendum result was announced, with levels of financial distress falling…
UK businesses remain resilient in the face of Brexit
UK businesses remain resilient in the face of Brexit
UK businesses across nearly every sector of the economy were showing positive signs of stability following the EU Referendum, new research from Begbies Traynor, the UK’s leading independent insolven…

Advice You Can Trust

Insolvency Practitioners Association Institute of Chartered Accountants in England and Wales R3: Association of Business Recovery Professionals ICAEW Business Advice Service Turnaround Management Association ACCA (the Association of Chartered Certified Accountants) ICAS | The Institute of Chartered Accountants of Scotland