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Can a company get its money back from a supplier?

By Joe Milstone |

Beld asked:

My supplier is located in Canada, and still own us money, he always gave us a reason for not shipping our goods, once I ask him to send us our money back, I found out he closed his company, can I still get my money back?

Joe Milstone answered:

You're probably getting more into bankruptcy/insolvency and inter-jurisdictional issues which I'm not that intricately familiar with. Generally though, he should be able to bring a claim for the return of his money or the delivery of his goods. Part of that may involve better understanding where the contract was formed and where the claim has to be made.

Even if in Canada though, if it is true that the company is insolvent or has ceased operations, enforcing the claim (even if victorious) may be futile, and then he'd be into having to follow and trace the flow of his funds out of the company (assuming they went out) in order to make some kind of undue preference argument.

And of course he may also be in line with other unsecured creditors to share pro rata in what is left of the supplier's assets. If he had taken and registered security against the supplier, including possibly on the goods sought to be sourced, then he may have been in a better position.

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