A Customer Went Into Administration Owing You Money? What Suppliers Can Still Do (and the Slow Payers to Chase Now)

David Jones went into voluntary administration on 5 November 2026, and within a day its suppliers were telling the ABC about invoices that had been unpaid since April. If a customer of yours has gone into administration owing you money, you cannot sue it or chase it the usual way while the administration runs, but you can lodge a proof of debt, vote at the creditors’ meetings and decide whether to keep supplying. The bigger lesson is for the customers who have not collapsed yet. If one of them is paying slower every month, the time to put a demand in writing is now, while the debt can still be chased. Claim Done drafts that letter of demand from your answers for a flat A$49, and you approve it before it is sent.

What happened at David Jones, and why suppliers are angry

The facts reported so far are specific. McGrathNicol was appointed as voluntary administrator and FTI Consulting as receiver on behalf of the company’s biggest lender, Hilco, with the business continuing to trade while the administrators review it. One supplier, the fashion label Beysis, told Inside Retail that David Jones had negotiated strict terms: payment within 14 days, in exchange for a significant discount. Its invoices date back to April.

The ABC’s first report adds the pattern that every small business owner should recognise. After April, payments started to drift beyond 30 days. Phone calls went unanswered. Restock orders kept arriving. Beysis had already begun debt recovery proceedings by the time the administrators walked in.

Do the arithmetic on that. Seven months is roughly 210 days, about fifteen times the 14-day term the supplier gave a discount to get. The discount bought nothing. And the supplier kept shipping stock against a customer that had already stopped honouring the deal.

A second ABC report says another brand, Slowdown Studio, is owed $75,000, and that the receivers’ own document describes any debts outstanding at 5 November as “subject to the outcome of the administration process”. An insolvency practitioner quoted in the piece puts small suppliers at the very bottom of the order in which money is paid out, behind the secured lender and employees.

Your customer is in administration. What you can and can’t do

Start with the rule that surprises most people. ASIC’s guide for creditors in a voluntary administration says unsecured creditors “cannot begin, continue or enforce their claims against the company” without the administrator’s consent or the court’s permission. That freeze covers the demand letter you were about to send, the tribunal claim you were drafting and the court case already under way. The same guide says owners of property held by the company generally cannot take it back during the administration, and personal guarantees cannot be acted on without the court’s consent.

So the ordinary debt-recovery playbook is paused. What you do instead:

• Lodge your claim. To vote at creditors’ meetings you must give the administrator details of your debt, usually on a proof of debt form. Gather the invoices, delivery records, the agreed payment terms and every email chasing payment.
• Turn up to the meetings. ASIC’s guide says the first meeting must be held within eight business days of the appointment and the second within 25 business days, unless the court extends the time. For David Jones, the ABC reports the first creditors’ meeting is set for 11am on 17 November.
• Vote with your eyes open. At the second meeting creditors decide whether the company goes back to its directors, enters a deed of company arrangement, or is wound up. The administrator’s report before that meeting is the best information you will get about what is likely to come back to you.

None of this is fast, and none of it promises a return. That is precisely why the earlier stage matters so much.

Should you keep supplying a customer in administration?

David Jones’ suppliers are being asked exactly this. The receivers say suppliers can continue by opening fresh accounts with them, and that “properly incurred post-appointment trading invoices will be paid by the receivers in accordance with existing trading terms”. ASIC’s guide also notes that debts the administrator incurs while running the business are paid as costs of the administration, and the administrator is personally liable for them.

That is a different footing from your old invoices. New supply on a new account sits under the people now running the business. Old invoices sit in the queue with every other unsecured creditor. Keep the two completely separate: a fresh account, fresh invoices, and nothing that rolls the old debt into the new relationship. Beysis told the ABC it would not keep supplying at this stage. Whether you do is a commercial call about your stock, your margin and how much you trust the new arrangement, not an obligation.

The warning signs you can see months earlier

The useful part of the David Jones story is how visible the trouble was before 5 November. Every sign the suppliers described is one you can watch for in your own debtor list:

• Payment terms quietly stretching, from 14 days to 30, then 60.
• Part payments, or payments that clear one old invoice while new ones pile up.
• Accounts staff who stop answering, or answers that promise a payment run “next week” every week.
• New orders arriving while old invoices sit unpaid.

That last one deserves the most attention. A customer that keeps ordering while not paying is, in effect, borrowing from you at no interest and without asking. When a big account starts doing it, the instinct is to keep the relationship warm. The supplier stories this week show where that instinct ends.

What to do this week with a slow-paying customer

If an account is drifting but the customer is still trading, you still have every option the administration took away from the David Jones suppliers. Use them in order.

First, stop extending more credit than you can afford to lose. Put the account on hold, cash on delivery, or a credit limit, and tell the customer in writing why.

Second, send a short reminder that names the invoices, the amounts, the original due dates and a firm new date to pay. The government’s guide to preventing and recovering unpaid debt sets out the same escalation: reminder first, then a letter of demand, then dispute resolution or a small claim.

Third, if the reminder goes nowhere, send a letter of demand. A demand that works states who owes what, the invoice numbers, the total, a final date to pay, how to pay, and what you will do if the date passes. It changes the conversation from a friendly chase to a dated record, and it is the document a tribunal or court will expect to see if you go further.

Fourth, if the customer agrees to pay but cannot do it in one hit, lock the promise into a written payment plan agreement with dates and amounts, rather than an email that says “we’ll sort it out”.

And if the customer is a company that is not disputing the debt, a creditor’s statutory demand is a sharper tool with strict rules. Read how a statutory demand differs from a letter of demand before you choose it.

One honest limit: if the customer slides into administration after you have sent the demand, the freeze still applies. The point of acting early is that you give yourself months of runway to be paid, put on a plan, or stop supplying, instead of discovering the problem in an administrator’s circular.

Check your terms of trade before the next big order

The David Jones suppliers had terms. They just had nothing behind them. Three questions are worth answering about your own terms before you take on a large account:

• What happens when they pay late? Interest or a late fee only helps if it was agreed before you supplied, so it needs to be in the terms the customer accepted.
• Do you keep ownership of goods until they are paid for? A retention of title clause is the usual way suppliers try to do this. ASIC’s creditors’ guide tells secured creditors to register their security on the Personal Property Securities Register, and whether your clause needs that step is a question to settle before you ship on credit, not after an administrator is appointed.
• Can you stop supply? Your terms should let you suspend orders when an account is overdue, so the decision is a contract right rather than an awkward phone call.

If you are about to sign a supply agreement written by a big customer, read those clauses closely. The discount-for-fast-payment trade only works if the fast payment actually arrives and you have a remedy when it does not. Claim Done’s Contract & Agreement Reviewer flags those clauses in plain English before you commit.

What Claim Done does, and what it costs

Claim Done turns your answers and evidence into a ready-to-send document at a flat fee, Australia-wide, with no subscription and no retainer. A letter of demand is A$49. A Statutory Demand is A$97. Contract review and every other service are on the pricing page. You review and approve every document, and only then is it sent by email. Claim Done is not a law firm; it builds the document from the facts you provide, so the clearer your invoices and emails, the sharper the letter.

The difference in speed is the point. A demand drafted this afternoon can be in your slow payer’s inbox today with a deadline that falls before the Christmas shutdown. The same letter in February may be a claim form for an administrator.

Got a customer whose payments are drifting the way David Jones’ did? Start your letter of demand on Claim Done: answer a few questions about the debt, review the draft, and approve it to send.

Frequently asked questions

Can I send a letter of demand to a company in voluntary administration?

Not to recover the old debt in the usual way. ASIC's creditors' guide says unsecured creditors cannot begin, continue or enforce claims against the company during the administration without the administrator's consent or the court's permission. Lodge your claim with the administrator instead, usually on a proof of debt form.

How do I claim money from a company in administration?

Give the administrator details of your debt, usually on a proof of debt form, with your invoices, delivery records and payment terms attached. That entitles you to vote at the creditors' meetings. The first meeting must be held within eight business days of the appointment and the second within 25 business days, unless the court extends the time.

Will I be paid for goods I supply after the administrator is appointed?

Debts the administrator incurs while running the business are paid as costs of the administration, and ASIC's guide says the administrator is personally liable for them. In the David Jones case, the receivers said properly incurred post-appointment invoices will be paid on existing trading terms through fresh supplier accounts. Keep new supply on a separate account from the old debt.

What are the warning signs a customer may not pay?

Payment terms stretching from 14 days to 30 and beyond, part payments, an accounts team that stops answering, and new orders arriving while old invoices sit unpaid. Those were the signs David Jones suppliers described before the administration. When you see them, put the account on hold and send a written demand while the customer is still trading.