Effective debt collection procedures are an essential part of any business; not only does debt impact on cash flow but also one’s ability to trade. If you find yourself in a sticky situation it is important to know the best way of recovering money when the debtor is unwilling or unable to pay.
Here are some of the most common options available to a creditor to recover debt.
Court proceedings
This is the most common method, but litigation is never without its risk and remains an expensive exercise (although there are various methods open to a party to fund a claim). Recently, there has been a significant rise in court fees and a claimant must also be aware that obtaining a judgment against a defendant may only be half the battle, as it can be both time-consuming and expensive to enforce a judgment.
Winding up proceedings
A creditor can make an application to wind up a company on the grounds that it is unable to pay its debts. The advantages are that the threat can put considerable pressure on a company to pay a debt promptly and that the basic procedure is relatively quick and inexpensive. Set against that, winding up proceedings are not something to be undertaken lightly and should not be used where the debt is disputed or if the company has a genuine cross-claim or right to ‘set-off’. Furthermore, there may be very little by way of a dividend to be paid to unsecured creditors once the company has entered into liquidation and, even when there are assets available for distribution, there is often a substantial delay before the dividend is paid.
Mediation
This can be a very effective tool in resolving disputes and is now actively encouraged by the courts, so much so that, if a party unreasonably refuses to engage in mediation first, then this can lead to them being penalised. Perhaps more importantly though, mediation may allow the dispute to be resolved without significant harm to the creditor’s trading relationship with the debtor.
Nick Southwell is an experienced litigator who handles a range of commercial disputes. These include contractual disputes, landlord and tenant matters, property disputes and professional negligence claims. He is an accredited civil and commercial mediator.
A 2021 Court of Appeal decision suggests that landlords are off the hook if they failed to serve the energy performance certificate (EPC) or gas safety certificate (GSC) for an…
Our litigation & dispute resolution partner outlines some of the commercial risks involved in proceeding to trial in an intellectual property infringement case. In trademark infringement and passing off cases,…
In this Spring update our experienced partners in commercial property and property litigation will share insight on several topics. The first is a look at development land and will include…
Our website uses cookies to improve your experience while you navigate through our website. Out of these cookies, the cookies that are categorised as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyse and understand how you use our website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies but it may affect your browsing experience on our website. You can find our cookie policy here.
Necessary cookies are absolutely essential for our website to function and enable core functionality such as security and accessibility. These cookies do not store any personal information. You can block these cookies by changing your browser settings, but this may affect how the website functions.
We use performance cookies such as Google Analytics to help us count the number of visitors and to see how visitors move around our website when they are using it. This helps us to improve the way our website works, for example, by ensuring that users are finding what they are looking for easily. The cookies collect information in a way that does not directly identify anyone. For more information on how these cookies work, please see our cookie policy.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Cookie
Duration
Description
__cf_bm
30 minutes
This cookie, set by Cloudflare, is used to support Cloudflare Bot Management.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Cookie
Duration
Description
_ga
2 years
The _ga cookie, installed by Google Analytics, calculates visitor, session and campaign data and also keeps track of site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to recognize unique visitors.
_gat_UA-562889-3
1 minute
A variation of the _gat cookie set by Google Analytics and Google Tag Manager to allow website owners to track visitor behaviour and measure site performance. The pattern element in the name contains the unique identity number of the account or website it relates to.
_gid
1 day
Installed by Google Analytics, _gid cookie stores information on how visitors use a website, while also creating an analytics report of the website's performance. Some of the data that are collected include the number of visitors, their source, and the pages they visit anonymously.
vuid
2 years
Vimeo installs this cookie to collect tracking information by setting a unique ID to embed videos to the website.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.