Nicked, distinguished companion is put inside (7)
I believe the answer is:
notched
'nicked' is the definition.
(I've seen this before)
'distinguished companion is put inside' is the wordplay.
'distinguished' becomes 'noted' (I've seen this in another clue).
'companion' becomes 'ch' (Companion of Honour).
'is put inside' indicates putting letters inside.
'noted' going around 'ch' is 'NOTCHED'.
(Other definitions for notched that I've seen before include "Indented, incised" , "Carved with a nick" , "Serrated" , "Made incisions in (something)" , "marked" .)