Retention of title claims in administration and liquidation

The Romalpa decision established that an English seller may validly retain title until payment, and may recover the goods from a buyer in administration or liquidation. The mechanism cuts through the conventional priority pool: where the goods remain identifiable, they are simply not the company's property, and the officeholder has no claim to them.

For unsecured trade suppliers, RoT is frequently the only meaningful route to recovery. The general unsecured dividend in CVL is typically zero to a few pence in the pound; an RoT claim that recovers goods of full value is materially different in outcome.

The all-monies clause is the most commonly used form in modern UK supplier contracts. Armour v Thyssen settled the point that the supplier retains title to goods otherwise paid for where any other invoice remains outstanding — a powerful position that effectively cross-collateralises the relationship.

To succeed against an officeholder, the supplier must establish:

• ›Valid incorporation of the clause into the contract. Standard terms on the back of an invoice issued after delivery do not bind the buyer (Butler Machine Tool v Ex-Cell-O [1979] 1 WLR 401 — battle of the forms).
• ›The goods can be specifically identified in the buyer’s possession at the appointment date.
• ›The goods have not been irretrievably mixed with other goods, used in manufacturing, or sold on.
• ›Payment for the relevant invoices remains outstanding.
• ›No other arrangement — such as a registered charge — has displaced the RoT.

• ›Acknowledge the claim; request the contract evidencing the clause and its incorporation.
• ›Inventory goods identifiable as supplied by the claimant.
• ›Apply a SIP-compliant verification process, particularly where continued trading is contemplated.
• ›Where urgent sale is needed, agree a holding arrangement — goods sold, equivalent sum reserved pending resolution.
• ›Where the claim is disputed, supplier applies to court for delivery up or damages.

• ›Identification — bulk commodities commingled with other supplies often cannot be traced.
• ›Processing — components incorporated into finished products usually extinguish the supplier’s interest.
• ›Onward sale — buyers in possession after sale take free of the supplier’s interest under s.25 SGA 1979.
• ›Goods in transit — governed by unpaid seller’s lien and stoppage in transit (ss.41–46 SGA 1979) running alongside RoT.

• ›Notify the officeholder in writing within days of appointment, identifying invoices and goods claimed.
• ›Request immediate access to the buyer’s premises to inventory the goods.
• ›Preserve all contract documentation — contract, terms, delivery notes, invoices, correspondence.
• ›Decide whether continued supply on existing RoT terms remains commercially viable, or whether COD terms should apply going forward.
• ›Take legal advice early where the claim is contested — limitation and practical recovery considerations militate against delay.

Directors should not treat RoT as solely an officeholder problem. Pre-appointment conduct affects the position:

• ›Deliberate concealment of RoT goods, commingling with other stock, or use in manufacturing knowing of an impending appointment exposes directors to misfeasance under s.212 IA 1986.
• ›Diverting RoT goods to a phoenix company is a recurring CDDA disqualification feature.
• ›Accurate pre-appointment stock records identifying RoT-protected goods reduce officeholder challenge scope.

For landlord remedies and the moratorium interplay, see Landlord forfeiture and CRAR. For enforcement officers and bailiffs, see HCEO and bailiff powers. For trading through administration, see Trading through administration. For phoenix issues, see Phoenix companies and the legal limits.