Put your whole account in the proof of debt, not just the unpaid invoice
A proof of debt is your claim in the administration or liquidation, and it should carry everything you were owed on the day. The unpaid invoice is only part of it. Work done since your last application, retention and materials you do not get back all belong in it, each on its own line.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
Why it matters
The proof of debt form looks simple: your details, a figure and a space for documents. So most subcontractors enter the invoice they were chasing, because that is the number they know. But the administrator or liquidator pays a dividend only on what you prove. Anything you leave out is money you never claimed. Your account on the day is usually much bigger than the overdue invoice. It includes the application not yet due, the work done since, your retention and any materials the office-holder keeps or uses. A round figure with nothing behind it also gets cut first. A claim set out line by line, with the documents attached, is much harder to reduce.
How to do it
- Fix the account at the date of the appointment, from your subcontract and your payment records.
- List each part as its own line: unpaid applications, work done since the last one, retention and any materials not returned to you.
- Attach the evidence for each line: applications, notices, measures, delivery tickets and the retention terms.
- Take off anything already paid, and answer each cross-claim before you settle the figure.
- Send the proof in the form the administrator or liquidator asks for, by its deadline, and keep proof that it arrived.
Example
Illustrative example. The scenario and figures are invented.
The facts
A drainage subcontractor's main contractor goes into liquidation owing it an overdue invoice of £41,000. The liquidator writes asking creditors to send a proof of debt, and the credit controller plans to claim the £41,000.
What happens
- The commercial manager fixes the account at the liquidation date from the subcontract and the payment records.
- Work done since the last application adds £27,000, from the measure agreed on site that week.
- Retention held at 5 per cent adds £18,000. Pipe left in the compound, which the liquidator will not return, adds £6,000.
- Each line goes in with its application, measure, retention clause or delivery ticket attached.
The proof of debt in figures
| Line | Amount |
|---|---|
| Overdue invoice | £41,000 |
| Work since the last application | £27,000 |
| Retention held | £18,000 |
| Pipe kept by the liquidator | £6,000 |
| Proof of debt | £92,000 |
The outcome
The liquidator admits the proof at £92,000. Any dividend is now paid on more than twice the figure the credit controller would have claimed.
To have this done for you, see our Insolvency Claim service.