Supplier gone into liquidation. Our rights?

Toodles_27

As the title suggests, our supplier has gone into liquidation. We have had a letter looking for €x that is due to them. We have no problem with paying them what is owed to them however there are 2 issues:
1. We have returns stock that was due to go back on a stock rotation agreement with the supplier. Are they obliged to take this back? Or could we make an offer for it at a reduced price?
2. Some of the goods we sold from supplier are under warranty for x amount of years. Now that the supplier is gone the warranty is as such gone too. We want to make an offer to cover the cost of possible claims, is this likely?

Basically, we want to pay the debt owed minus the value of returns and compensation for possible warranty claims.

Has anyone any advice on our situation legally?

Thanks

dbran

Ring the liquidator and make the offer.

dbran

Toodles_27

Thanks for you reply.
Can they refuse to take back the stock? Our position would be that technically the stock is not paid for and is therefore the property of the liquidated supplier not us. Do we have a leg to stand on in this regard?

delahuntv

Toodles_27 wrote: »

Thanks for you reply.
Can they refuse to take back the stock? Our position would be that technically the stock is not paid for and is therefore the property of the liquidated supplier not us. Do we have a leg to stand on in this regard?

If you have it in writing, then you may return the stock as its effectively "on loan" until sold.

But otherwise write out your case to the liquidator and explain how you cam up with the offer and you will probably find it is accepted.

pedroeibar1

Firstly, if the amount is large it would be worth your while getting your auditor/accountant involved; s/he would have been down this road before and would give worthwhile advice as they would be familiar with your business and a liquidation process. In your position I would try to work with the liquidator rather than pi$$ him off (initially at least!).

You really need to understand your contractual relationship with that supplier. What does your sales agreement say? The stock you are holding – have you title to it? i.e. has it been invoiced or are you holding it on consignment? What is its shelf life? Is it readily saleable? Under what terms can it be returned? You say “Our position would be that technically the stock is not paid for and is therefore the property of the liquidated supplier not us. Do we have a leg to stand on in this regard?” If it was validly ordered by you and invoiced by them IMO you are legless with that argument unless your sales/supply contract has something to the contrary.

On the warranty claims, my non-legal opinion is that you will have to suck that risk up, your customers have a contract with you. Should something ‘go wrong’ the buck stops with you – were the supplier still trading you could enjoin them in any claim, but as they are no more, forget that. If there have been prior warranty claims I would notify your lawyers and insurers that X Supplier has gone bang, and while you have no claim notifications you want just to put them on notice. (CYA)

If the stock has a short shelf life you might be able to do a deal with the liquidator to shift all stock (including other stuff) for him. He could/would be very happy with this. Talk, be friendly rather than confrontational, and do not issue threats. He will in the past have been threatened by people far richer and more powerful than you. The liquidator has to deal with all creditors/debtors equally, so he will not go out on a limb for you – you have to make a good case to make your offer “fair & just” to get him to accept it.

Sales contract = where most credit control falls down.

pedronomix

The Liquidator is sucking the hind tit here. Ask him to stand over the warranties, watch him vanish. He is effectively and legally the company now. Tell him you are prepared to return all now useless un-guaranteed stock, once you have his undertaking with regard to his warranties otherwise you will sell it to defray the potential liabilities. Do not offer the rotation stock back yet, let him stew... not the slightest chance of him doing anything legally. Be aware that he is bound by the court to take the lowest cost option in favour of the creditors.

pedroeibar1

pedronomix wrote: »

The Liquidator is sucking the hind tit here. Ask him to stand over the warranties, watch him vanish. He is effectively and legally the company now. Tell him you are prepared to return all now useless un-guaranteed stock, once you have his undertaking with regard to his warranties otherwise you will sell it to defray the potential liabilities. Do not offer the rotation stock back yet, let him stew... not the slightest chance of him doing anything legally. Be aware that he is bound by the court to take the lowest cost option in favour of the creditors.

With respect Pedro, is that not putting the boot in before the true picture / the key data is known? As in what is the liklehood of a warranty claim? I get a sense that this customer is looking for not just a bargain but something for nothing (“Our position would be that technically the stock is not paid for and is therefore the property of the liquidated supplier not us....") Why not go all the way and suggest writing to the liquidator and say that the 'stock' is incurring storage charges at X per day. We don't have enough info to give plain advice IMO.

pedronomix

The last thing the Liquidator wants back is out of date stock and the costs of transporting it etc. Possession is 9 parts of the law in reality, the OP has a valid lien on the unpaid goods to the level of reasonable liabilty cost in respect of the potential warranty claims( assuming they are a real and not imagined issue). This is not a normal commercial relationship with the liquidator and there is no business going forward. Start from a tough intransigent position and ease back as you progress to a point where you are still happy to deal. Liquidation staff are accountants and not very commercially aware, they just want to turn anything that they can get their hands on into cash in the shortest possible time at the lowest cost to them!

delahuntv

pedronomix wrote: »

The Liquidator is sucking the hind tit here. Ask him to stand over the warranties, watch him vanish. He is effectively and legally the company now. Tell him you are prepared to return all now useless un-guaranteed stock, once you have his undertaking with regard to his warranties otherwise you will sell it to defray the potential liabilities. Do not offer the rotation stock back yet, let him stew... not the slightest chance of him doing anything legally. Be aware that he is bound by the court to take the lowest cost option in favour of the creditors.

pedronomix wrote: »

The last thing the Liquidator wants back is out of date stock and the costs of transporting it etc. Possession is 9 parts of the law in reality, the OP has a valid lien on the unpaid goods to the level of reasonable liabilty cost in respect of the potential warranty claims( assuming they are a real and not imagined issue). This is not a normal commercial relationship with the liquidator and there is no business going forward. Start from a tough intransigent position and ease back as you progress to a point where you are still happy to deal. Liquidation staff are accountants and not very commercially aware, they just want to turn anything that they can get their hands on into cash in the shortest possible time at the lowest cost to them!

The OP has just had ONE single standard letter from the liquidator and you want them to go blazing saddles on the basis on ONE standard letter?

:rolleyes:

OP - Having respect for the liquidator (or anyone else for that matter) will ALWAYS get you a better and quicker result.

Do the analysis, come up with what you think is a reasonable offer, give reasons for that offer and you will probably find you will get a quick and amicable solution.

If on the other hand, you go in with hobnailed boots as is being suggested by pedronomix demanding all sorts, the liquidator can sit on you debt for any months and ask you to provide all the proof of the deals, give you plenty of hassle, threaten court action and generally cause you far too uch hassle than its worth.

But judging by your post, I doubt if that's your style!

pedronomix

I never suggested going in all guns blazing, this is a strategy suggestion, delivery style is a matter for the OP to work out. It is not the OP's debt, it is the liquidators, so the liquidator is the guy with the problem. If he wants some dough, he needs to tango! Explain to the liquidator as to how it is not a simple matter, you can take it they have no idea how any individual business actually works until they have got some time sorting through it all. They deal with as much as they can, as soon as they can, generally Retention of Title issues with suppliers first. The result, not the niceties are all that matter here. If the OP tries to be too greedy, he may well get stuffed.... this is simple business stuff.. do a deal and move on.