In 2025 there were almost 24,000 registered company insolvencies in the UK. This means that 1 in 190 companies entered insolvency last year, many of those leaving freelancers’ invoices unpaid.
It’s challenging recovering money from liquidated companies so it help to be aware of your rights. However, even if you are alert to your client’s danger there is sometimes very little money to recover (hence why they’re going out of business), and multiple suppliers are in the same position as you.
Here’s how to maximise your chance of recovering what’s owed to you when a company liquidates.
Make sure you’re registered as a creditor
It isn’t a secret when a company liquidates. This is publicly available information on Companies House and whoever is handling the liquidation is required to notify you.
The liquidator will contact you with an “initial notice to creditors” letter. This details what’s happening and outlines the steps you need to take to recover what’s owed to you. These letters can sometimes be long and overwhelming, but the most important part for a freelancer is the proof of debt form that’s included.
The proof of debt form will need to be filled out and returned. Be aware that there’s a deadline so it’s critical you review any correspondence immediately and act upon it.
We’ve seen too many freelancers contact us after the window of opportunity has lapsed for advice. Sadly there is nothing you can do once the deadline has passed.
If you’re aware of a client that’s liquidating but you haven’t heard from the insolvency practitioner, you can reach out to the practitioner directly to register yourself as a creditor. This information is publicly available on Companies House, and sometimes a notice is posted on the client’s website.
Once you’ve submitted your proof of debt form you’ll be registered as a creditor.
The waiting game
The bad news is, being registered as a creditor doesn’t guarantee your fees. It’s possible you won’t receive anything. This is for a few reasons.
Firstly, a freelancer that’s owed money would be classed as an unsecured creditor. Simply put—you’re not a priority when it comes to getting paid. Secured creditors are a priority. Secured creditors are usually banks and finance providers.
Secondly, it’s likely you are one of a number of unsecured creditors. Once the company assets are sold and secured creditors are paid. The remaining money (if there is any) is distributed between the unsecured creditors.
This means you’ll only receive a portion of your fees.
I hate to say it, but receiving only a portion of your fees would be considered a good outcome. This is because around 90% of insolvencies result in freelancers receiving nothing.
How to ensure you receive money in full when a client liquidates
There’s really no guarantee in these situations, but there are things you can do to mitigate your risk.
Trade credit insurance
There’s an insurance product that insures the risk of non-payment, meaning most of your invoice fee can be paid by the insurer if a client becomes insolvent. It’s called trade credit insurance.
Client check
It’s a good idea to check your client’s financial position before getting into business with them. This can flag any financial failings. That’s where value added services like our client check tool can help.
Can’t my legal expenses insurance help?
We won’t stop you from filing a claim with the insurer, but part of our job is to manage your expectations. Since the legal expenses policy hinges on a 50% or greater chance of recovering the debt, a liquidated client would fall well below that and the claim would likely be rejected.
The outlook of recovering money from a liquidated client feels bleak when we look at the reality. That’s why risk management like client checks, Companies House records and winding-up petitions are so important. This is all publicly available data that takes 2 minutes to check before onboarding a client. Make use of it!
