As we all know, late payments result in pressure on working capital which may result in company failures. Don’t let this happen to you.
Are your customers delaying payment?
Those of you involved in credit control may take the view that no further action is required if, despite late payment, a continued dialogue is taking place with your debtor and promises of payment, even if these result in only part payment of monies due, are being kept. However, we would urge you to take immediate action, when your debtor is not responding to your letters or phone calls or where promises of payment are made, but not kept. This is an indication that your debtor is in real financial trouble and if you do not obtain payment now, then the chances are that you never will.
Sometimes a solicitor's letter threatening to commence court or winding-up proceedings is all it takes to make payment of an outstanding invoice your customer’s top priority.
We may be able to work on a “no win no fee”, basis, in which case we will charge a commission if we are successful in obtaining payment. Alternatively, we are happy to discuss fixed fees.
Or are they raising a spurious dispute?
Given the current financial climate, underhand debtors may say that your debt is disputed or allege that they have some claim which should be set off against the amount they owe you (“counterclaim”) in an attempt to try and fend off the issue of bankruptcy or winding-up proceedings.
As a general rule the Insolvency Court will refuse to make a winding-up or bankruptcy order on a petition based on a disputed debt, however the raising of a dispute by your debtor will not necessarily prevent the issue of winding-up or bankruptcy proceedings.
The Insolvency Court will assess the merits of any dispute, which must be honestly raised and which your debtor must evidence is based on substantial grounds. In the absence of such evidence, the Court will allow the insolvency proceedings to proceed. This is similarly the case with counterclaims. In order to prevent the issue or continuation of insolvency proceedings, your debtor must show that his counterclaim is genuine and exceeds the amount owed to you or reduces the amount to a sum below £750.
Insolvency proceedings offer a quick and cost effective alternative to litigation and in our experience can be extremely effective to deal with spurious disputes. If you consider that your debtor’s alleged dispute or counterclaim is without merit, then we can assist you in persuading your debtor that his argument is unsustainable, that you are entitled to pursue bankruptcy or winding-up proceedings and that the best option is to pay up.
What to do if you are faced with the issue of a petition?
Whereas your debtors may raise a dispute to try and avoid the issue of a petition, it may equally be the case that an unscrupulous creditor may try and exert pressure on you to obtain payment of a debt you owe which you genuinely dispute through the improper use of bankruptcy or winding-up proceedings.
If you are a company or an individual in receipt of a statutory demand, winding-up or bankruptcy petition and you consider that you have a genuine dispute in relation to the debt owed or you believe that you have a valid counterclaim (which if set off against the debt you brings the amount you owe below the amount of £750), then you must seek immediate legal advice.
We may be able to assist you in setting aside statutory demands (in the case of individuals) or obtain an injunction to prevent either the presentation or advertisement of the winding-up petition. There is only limited time available to make such an application and you therefore need to act extremely quickly.
Alternatively, we may be able to assist you in negotiating more time to raise funds to pay your creditor.
For a no-obligation chat about how we can help you with bankruptcy and winding-up proceedings, please contact Andrew Harris on 01926 880784.
