1. Check the small print. If you do not want to continue, you must have the legal right to terminate the supply contract.
2. Tighten up your insolvency events of default. Use every opportunity, whether at the outset of the trading relationship or in return for any forbearance or indulgence, to put in place or improve your right to terminate at the earliest threat of failure, whatever that may be.
3. Be vigilant and monitor the position carefully. Prepare to act quickly. Ideally, your terms will give you access to real-time information to monitor and identify defaults as they arise. Make sure you take full advantage or use your commercial leverage to be kept in the loop. Identify what the warning signs might be.
4. Consider your resourcing options carefully. Terminating will not be a practical option unless and until critical supplies can be resourced elsewhere and all necessary equipment, IPR and other assets which enable your new supplier to manufacture or deliver have been repatriated; a costs-benefit analysis of all the options (including staying with the present supplier) may need to be undertaken urgently.
5. Be prepared to support: understand what the plan is. Use your commercial leverage, if your ongoing support is required, to obtain all the information you need to ascertain what the plan is, and whether it is capable of succeeding within an identifiable and manageable time period.
6. Is the plan feasible? Can you suggest changes to it? Have all the potential pitfalls which might cause the plan to founder been addressed? Is the support you are required to give fair and commensurate compared to the support which other stakeholders might be expected to contribute e.g. other dependent customers, lenders, shareholders, employees and others.
7. There may be more than one way to support your supplier. Does your support have to involve a price increase? Consider other means e.g. revised payment/credit terms, loan (secured or otherwise), contracting directly with sub-contractors lower down the chain, use of trust arrangements and retention of title to protect your position and secure future supplies.
8. What might the quid pro quo be? Consider the extent to which any revisions to the terms and conditions of trade by which you support your supplier might be rewarded by improvements to the commercial and/or legal terms in your favour; and make sure all are properly documented!
9. Work out a Plan B. Use the extra time available in any survival programme to prepare for the worst: whether to re-source (given time) or to understand the insolvency options and do what you can to minimise the impact of a formal insolvency appointment on you, or influence the timing of any appointment/choice of appointee.
10. Prepare for the transfer of the business, whether by an insolvency office-holder or otherwise: check the small print again! Understand the process to avoid nasty surprises. Think laterally: is this an opportunity to bring the supply of this product or service in-house? Can you influence the transfer to your preferred bidder through contractual prohibitions on assignment and commercial leverage? Can this be turned to your commercial advantage through consolidation or otherwise?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.