Fraud type · Bankruptcy fraud
Bankruptcy fraud in transport: order, don't pay, go bust and start again
Every bankruptcy costs suppliers money. But with bankruptcy fraud it is not bad luck: it is a plan. As much as possible is bought on credit, and then there is nothing left.
Two forms
1. The company deliberately stripped
A company buys as much as possible on credit in a short time: goods, transport, services. The goods are resold quickly and below cost, the money moves to other companies or accounts. Then comes the bankruptcy, and the trustee finds an empty shell. Sometimes the company was set up or bought for this purpose. See also The dormant company.
2. The phoenix restart
A company goes bankrupt with large debts, but the same people immediately start again: a new company, often with an almost identical name, the same customers, the same trucks, sometimes the same address. The debts stay behind in the old company. Repeated, this leaves a trail of unpaid suppliers.
The signals are in the timeline
You rarely spot bankruptcy fraud in a single detail. The pattern appears when you line up the events: losses in the latest figures, late accounts, a change of director, a change of address, and then suddenly a big order with a new supplier. The director's past also says a lot: was he involved in earlier bankruptcies?
10 red flags
- A jump in order sizeafter a few small, neatly paid orders.
- Losses or negative equityin the latest annual figures.
- Late or missing annual accountspast the filing deadline.
- Changes of director in quick successionor a new director just before the big order.
- The director was involved in earlier bankruptcies,sometimes several times.
- An almost identical nameto a company that recently went bankrupt.
- Payments get later and laterwith ever new excuses.
- Goods resold far below costor shipped to unusual addresses.
- Address changed to a mailboxor an address without activity.
- Request for longer payment termsjust as the orders grow.
One red flag is not proof. If you see two or more, stop and check further first.
Checklist: how to protect yourself
- Review the latest figures and whether they were filed on time
- Look up the directors and their earlier companies and bankruptcies.
- Check register changes in recent months: management, address, name.
- Search for a bankrupt company with an almost identical name or the same director.
- Set a credit limit per customer and raise it only step by step, based on payment behaviour.
- Ask for prepayment or a bank guarantee when an order jumps in size.
- Use retention of title in your terms so you can recover unpaid goods.
What to do if it goes wrong
- Stop delivering or driving while invoices are open.
- Invoke your retention of title and recover unpaid goods as soon as possible.
- Bankruptcy declared? Lodge your claim with the trustee and report your signs of possible fraud.
- Discuss with a lawyer whether the director can be held personally liable.
Let Safetybizz check it
Safetybizz lines up a company's timeline: figures, filings, changes of director and address, and the directors' track record. You see an approaching bankruptcy or a phoenix restart before you deliver.
See SafetyBizzFrequently asked questions
What is bankruptcy fraud?
Deliberately harming creditors around a bankruptcy, for example by buying a lot on credit and moving the money away, or stripping the company and continuing with a new one.
What is long firm fraud?
A fraud in which a company first builds trust with small, neatly paid orders, then orders a lot on credit at once and disappears.
Can I recover my goods after a bankruptcy?
Often yes, if you have valid retention of title and the goods are still present and identifiable. Seek legal advice and contact the trustee quickly.
Read also
This page is general information and not legal advice.