David Jones Collapse: Protecting Your Brand When a Retailer Fails

David Jones's collapse left brands unpaid. Cut retailer bankruptcy supplier risk with warning signs, prepaid terms and the U.S. deadlines for unpaid invoices.

Adrian ReyesSenior Payments & Fintech Editor

November 6, 2026 · 8 min read

Photo: Pixabay

On this page 6 sections

What Happened in the David Jones Collapse
Why Suppliers Carry Retailer Bankruptcy Risk First
Warning Signs a Retail Account Is in Trouble
Tighten Payment Terms: Deposits, Shorter Terms and Card or ACH
Protect Inventory and Receivables Before a Filing
What to Do If a Wholesale Customer Becomes Insolvent

Key takeaways

When a retailer pays you before you ship, it isn't paying "money already owed." A trustee needs that element for a preference claim, so prepaid orders are much harder to claw back than late payments you pushed hard to collect.
If a U.S. retailer received your goods within 20 days before it filed, you can claim priority for their value under Section 503(b)(9). The court may set an earlier deadline for that claim than for regular claims.
Getting goods back through reclamation takes a written demand within tight deadlines. The retailer must still have the goods, and its secured lender's rights come first.
If one account shows two or more warning signs, such as paying more slowly, fighting with landlords, losing other brands or taking on new lender money, switch it to paid-before-ship terms before its next order goes out.

David Jones, Australia's 188-year-old department store, went into voluntary administration on Nov. 5, 2026, after it fell behind on rent and talks with its biggest landlord broke down. The fashion, beauty and accessory brands that stocked its floors are now creditors waiting to learn how much they'll get back. That is how retailer bankruptcy supplier risk usually plays out: by the time a store files, its suppliers have often been financing it for months. U.S. brands that sell wholesale on credit protect themselves by spotting trouble early, moving shaky accounts to paid-before-ship terms and knowing the U.S. deadlines for unpaid invoices.

What Happened in the David Jones Collapse

ABC News reported that David Jones went into administration after negotiations with landlord Westfield broke down. The retailer was behind on rent, and staff and suppliers such as fashion brands were left without answers. Scentre Group, which runs the Westfield centers and is the chain's biggest landlord, said David Jones hadn't paid rent since the end of September, according to Retail Gazette. Its owner, Anchorage Capital Partners, agreed to buy the chain from Woolworths Holdings in December 2022 and had been trying to cut rents and close stores.

Stores and the website keep trading while administrator McGrathNicol reviews the business. Reuters called voluntary administration Australia's closest equivalent to Chapter 11 in the U.S. Creditors, including suppliers, gift card holders, employees and the secured lender Hilco, will vote on what happens next. Their first meeting was set for the following Tuesday.

Some suppliers didn't wait. Makeup, perfume and clothing brands went into stores and took back stock that belonged to them, not to David Jones. One supplier told reporters it was still owed A$16,000 and didn't expect to see it.

U.S. brands have seen this closer to home. Reuters noted in the same report that Saks Global emerged from Chapter 11 in June 2026 with fewer than half of its former stores.

Why Suppliers Carry Retailer Bankruptcy Risk First

In any department store collapse, suppliers on open terms are among the most exposed, because wholesale terms make the brand the retailer's lender. You ship in September on net 60; the store sells your goods and spends the cash on rent, payroll and debt service. Your invoice comes due in late November, just as a struggling retailer is choosing which bills to pay.

Suppliers are the easiest bills to stretch. A missed loan payment can trip a default and unpaid rent brings a landlord's notice, while a late invoice to a brand mostly brings a polite email. Secured lenders usually hold liens on the retailer's inventory and receivables, so they're paid from those assets ahead of trade suppliers who took no collateral. An unsecured supplier waits at the back of the line with everyone else.

There's a second hit many U.S. suppliers don't expect. Under Section 547 of the Bankruptcy Code, a trustee or the debtor can claw back payments made in the 90 days before the filing and spread that money among all creditors. So a brand can lose its unpaid invoices and then get a demand letter for invoices it was paid.

Warning Signs a Retail Account Is in Trouble

David Jones gave off signals in public before it filed: unpaid rent, a fight with its biggest landlord, a lender that had already provided "increased funding and flexibility," and, according to The Australia Today, the departure of several major fashion and luxury brands. Suppliers also complained of poor communication. Your accounts show similar signals, usually in your receivables before the news:

Payment drift. Days-to-pay creep up each cycle, partial payments replace full ones, or invoices the account never questioned start getting disputed or short-paid with deductions.
Real estate stress. News of rent disputes, lease renegotiations or a wave of store closures.
Peer brands leaving. If other vendors stop shipping or pull out, they may know something about how the account pays.
New lender money. A fresh loan, an asset-based lender stepping in or a sale to a buyer using heavy debt can mean the assets that would have paid you now secure someone else.
Odd ordering. A big holiday order from an account that's already slow, a request for longer dating, or a sudden push to switch you to consignment.
Silence. Buyers who answered the same day go quiet, or your buyer leaves and isn't replaced.

One sign alone can be noise. Two or more on the same account, especially with a large open order before peak season, means change terms before the next shipment.

Tighten Payment Terms: Deposits, Shorter Terms and Card or ACH

Trade credit risk for brands comes down to how much unpaid product sits in a customer's hands. Options, strongest first:

Paid before ship. The account pays the full order by card or ACH, and you release goods once funds settle.
Deposit at order, balance before ship. Common for custom runs and fine jewelry. Our guide to taking card deposits on custom orders covers the dispute paperwork.
Short terms with authorization on file. Net 10 or net 15, with a signed card-on-file or ACH debit authorization you run on the due date.
A hard credit limit. Orders over the limit wait until open invoices are paid.

Card and ACH do different jobs. A card payment shifts the credit risk to the buyer's card issuer, so you're paid even if the retailer later fails. It costs more than ACH, and the buyer can still dispute the charge, so keep the signed purchase order and proof of delivery. ACH costs less but can be returned, so ship after funds settle; see whether to accept Same Day ACH.

A virtual terminal for keyed and phone orders lets your AR team charge wholesale cards without a storefront. If you want to pass card costs to wholesale buyers, surcharging where state law and network rules allow has to be set up properly with your processor, not added to an invoice on your own.

Prepayment has a legal benefit too. A preference claim requires a payment on an "antecedent debt," meaning money already owed, as the Delaware Bankruptcy Litigation blog's primer on preference defenses explains. A payment for goods you haven't shipped yet isn't paying an old bill. How you collect matters as well. Payments made "according to ordinary business terms" can be defended, and an established collection policy helps keep them there. Unusual pressure on past-due invoices in the final months, like threats to cut off shipments, makes those payments harder to defend. Put new terms in writing and apply them the same way to every account.

Protect Inventory and Receivables Before a Filing

Know whether you sold the goods or consigned them. David Jones suppliers could clear their racks because the stock was theirs. In the U.S., goods sold outright on terms generally belong to the retailer once delivered. Consigned goods can also end up within reach of the retailer's lenders if the paperwork is weak. Ask a commercial lawyer whether your consignment agreements need a UCC filing before you ship.

Date every delivery. The U.S. remedies below depend on exactly when the retailer received the goods, so keep signed delivery receipts or carrier proof of delivery for every shipment.

Ship in smaller drops. Split a large holiday order into shipments, each released after the previous one is paid.

Illustrative Example: Same Account, Two Sets of Terms

Assumptions (illustrative, not real data): an apparel brand ships a regional chain $20,000 of goods a month on net 60. The chain files Chapter 11 on day 0. Three shipments are unpaid. Fifty-five days before the filing, the chain paid a $20,000 invoice 35 days late, after the brand threatened to stop shipping.

Item	Delivered or paid	Likely treatment
Shipment A, $20,000	Received day -75	General unsecured claim; outside the 45-day and 20-day windows
Shipment B, $20,000	Received day -40	Possible reclamation, only with a timely written demand and only if the goods are still on hand
Shipment C, $20,000	Received day -12	Priority claim under Section 503(b)(9) for goods received within 20 days
Late payment, $20,000	Paid day -55	Preference exposure; a late, pressured payment can weaken the ordinary-course defense

Under net 60, the brand has $60,000 at risk plus up to $20,000 it may have to give back, though the later shipments may reduce the preference exposure under the "subsequent new value" defense. If the brand had moved this account to paid-before-ship at the first warning signs around day -100, shipments A, B and C would have been paid before they left the warehouse. The old late payment could still draw a preference claim, but the $60,000 of unpaid goods wouldn't exist. The cost of that choice is real: the chain might have cut its order. For a slow-paying account heading into a holiday buy, losing the order is often cheaper than funding it.

What to Do If a Wholesale Customer Becomes Insolvent

This is general information, not legal advice. Call a bankruptcy lawyer as soon as a customer files; several deadlines are short.

Stop shipping on credit. Any further orders should be paid before they ship, on terms in writing.
Send a written reclamation demand. Under 11 U.S.C. § 546(c), a seller can reclaim goods the debtor received while insolvent within 45 days before the filing. The demand must be in writing within 45 days after receipt, or within 20 days after the filing if the 45-day period runs out after the case starts. The right is subject to a secured lender's prior rights, and it's lost if the goods have been sold.
Claim your 20-day goods. Section 503(b)(9) gives an administrative priority claim for the value of goods the debtor received in the 20 days before filing, and a Chapter 11 plan must pay those claims in full to be confirmed. Courts often set an earlier deadline for these claims than for ordinary claims, and missing it ends the claim.
File a proof of claim for the rest of your unpaid invoices as a general unsecured creditor.
Build your preference file now. Pull every payment from the 90 days before the filing, with invoices, proof of delivery and payment records. Go back further to show your normal payment pattern, which supports the ordinary-course defense.

Wholesale accounts elsewhere are under pressure too: Canadian buyers keep shifting away from U.S. brands amid tariffs. MannyPay also has pages for apparel brands, jewelry and diamond sellers and health and beauty businesses.

This week, pull your accounts receivable aging and sort wholesale accounts by days past due and by the size of their open holiday orders. Any account showing two or more warning signs should move to paid-before-ship before its next shipment leaves. If you need to take those payments by card, request a free quote and a MannyPay specialist will respond within one business day.

Sources

About the author

Adrian Reyes

Adrian Reyes is Senior Payments & Fintech Editor for Beyond the Swipe, covering credit card processing, merchant accounts, payment technology and processing fees.

This article is for general educational purposes and is not legal, tax or financial advice. Card network rules and state laws change; confirm current requirements for your business.