The route to recovering what's owed
As one of the inevitable consequences of recession is the inability of some businesses to pay debts it is essential for those seeking to recover payments to establish if their debtor can pay what they owe.
Our specialist Leonard Curtis Receivables team, which works in conjunction with and under the control of our Business Rescue and Recovery Services, is working with an increasing number of companies seeking to recover problem ledgers and individual debtors.
Our expertise in credit control, debt collection, distressed ledger collection and litigation covers all
areas of industry and commerce with director level supervision and involvement and in-house solicitors to help the funder manage potential areas of risk. We manage and secure the interests of all involved to ensure a successful outcome that maximises returns.
When seeking to establish if what is owed can be repaid there are various avenues to follow – downloading its latest accounts from Companies House, obtaining credit checks from reference agencies and asking questions directly of your debtor.
You may then decide to issue a County Court claim to recover the debt and if the debtor still fails to pay after a judgment is secured a Court bailiff can seize and sell the debtor’s goods at auction with proceeds used to pay the debt or if the debtor owns property, you can apply to court for a charge on land or securities.
A judgment can also be enforced via a third party debt order - the court grants an order for a third party who owes the debtor money to pay you instead.
If you’re unable to enforce a judgment, the nuclear option is to petition for the winding up of a corporate debtor or for an individual’s bankruptcy.
Insolvency proceedings should not be used to collect debt but if the debtor doesn’t dispute the debt and it’s more than £750, you can start the proceedings without first obtaining a judgment on the basis that you believe the debtor is insolvent and unable to pay.
Before presenting a bankruptcy petition against a person you must serve them with a formal demand for payment within 21 days or for them to apply to the court to set aside the demand because it’s disputed – this is a proven way of being paid.
Once a winding up or bankruptcy order is made, a liquidator, or trustee in bankruptcy, will be appointed to collect the debt and pay creditors.
Our advice is to watch your debtors very closely and act immediately on the first signs of financial distress.
Mark Colman, Leonard Curtis Business Rescue and Recovery.