Fraud type · Bankruptcy fraud

Bankruptcy fraud: order big, don’t pay, go bust

Insolvency can happen to anyone. But sometimes it is planned: first buy as much as possible on credit, move the goods or money away, then let the company collapse.

SafetyBizz Knowledge base · updated 24 October 2026 · 6 min read · NL

How does it work?

Short answer: a company builds trust briefly, then orders a lot on long payment terms, sells or moves the goods and lets the company go bust. The creditors are left empty-handed. Often the same person then starts a new company.

The variants

The bought shelf company: an existing company with a good name is taken over and then stripped. See The dormant company.
The phoenix company: a new company with almost the same name, address and customers, but without the debts.
The straw man: a director on paper only, so the real decision-maker stays out of sight.
The company in distress: no plan beforehand, but deliberately continuing to order when it is clear there is no way to pay.

For transport and logistics, see Bankruptcy fraud in transport.

Rule of thumb: look not only at who a customer is, but at what changes. A sudden change in ordering, directors or address often says more than a credit score.

Unsure about a company?

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10 red flags

Suddenly much larger ordersafter a period of small, properly paid ones.
A request for longer payment termsor a higher credit limit.
A recent change of directoror a new owner without experience in the sector.
A change of addressto a mailbox, a business centre or abroad.
Accounts missing or filed lateor showing losses and negative equity.
Different products than usualespecially easy-to-sell goods such as electronics or branded items.
Delivery to another addressthan the registered office.
Payments arrive later and lateror in small instalments.
Seizures, court claims or tax arrearsreported by authorities or other suppliers.
The same directorat earlier companies that went bust.

One red flag is not proof. If you see two or more, stop and check further first.

Checklist: how to protect yourself

Check the customer in the register at the start and at every large order: directors, address, changes.
Look at the accounts and the trend: losses, equity, late filing.
Look up the directors in insolvency registers and earlier companies.
Set a credit limit per customer and don’t raise it without a new check.
Include retention of title in your terms and conditions.
For a sudden large order, ask for (partial) prepayment.
Track your open invoices daily and stop delivering when payments fall behind.

What to do if your customer goes bust

File your claim with the insolvency practitioner and invoke your retention of title.
Tell the practitioner what you saw: large orders just before the insolvency, unusual delivery addresses.
Report it to the police if you think the insolvency was planned.
Check whether the directors start a new company before you deliver to it again.

Let Safetybizz check it

Safetybizz tracks the signals that often precede an insolvency: changes of director, changes of address, late or weak accounts and earlier insolvencies of directors.

Frequently asked questions

What is bankruptcy fraud?

Deliberately letting a company go bust after first buying as much as possible on credit or removing money and goods, so that creditors are not paid.

How can I tell whether a customer is in financial trouble?

Look at the accounts, late filing, changes of director or address, payment behaviour and seizures. Several signals together say more than a single score.

What is retention of title?

An agreement that delivered goods remain your property until paid in full. In an insolvency you can then reclaim them, if they are still present and identifiable.

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This page is general information and not legal advice.