Commercial debt recovery solicitors: Our panel of experts

Cash flow is essential for running your business. But, what happens when clients or customers refuse to pay? That’s where specialist debt recovery solicitors come in. Expert Commercial Law maintain a panel of specialist solicitors who can assist you in recovering outstanding debts.

Commercial debt recovery refers to the process of collecting unpaid debts from businesses or individuals who owe money to a company. When a business supplies goods or services on credit and the debtor fails to make timely payments, the creditor may initiate the debt recovery process to retrieve the outstanding amount.

How can commercial debt recovery solicitors assist you

Business debt recovery lawyers will aim to recover money owed to you in a quick and efficient manner. They will provide legal advice and assistance as well as representation if you proceed with any court action.

Recovering debts with the assistance of a solicitor involves several steps, aimed at ensuring the process is conducted professionally, efficiently, and within the legal framework.

  • Initial assessment: The first step involves the solicitor assessing the details of the debt. This will include the amount owed, the terms of the agreement, and any previous attempts at recovery. This assessment will help in determining the most appropriate course of action. They will usually advise on issuing a statutory demand before proceeding to bankruptcy proceedings or winding up a company.
  • Letter Before Action (LBA)/ Letter of Claim: A solicitor will usually start by sending a Letter Before Action under the Pre Action protocol to the debtor. This letter formally demands payment of the debt within a specified period, often 7 to 14 days. It also outlines the intention to pursue legal action if the debt is not settled. The LBA also serves to inform the debtor of the additional costs they could incur if the matter proceeds to court.
  • Negotiation and settlement: Before escalating the matter, solicitors often attempt to negotiate a settlement. This could involve agreeing on a payment plan that is manageable for the debtor. Settlement at this stage can save both parties time and legal costs.
  • Issuing court proceedings: If the debtor fails to respond or pay the debt as demanded, the next step is to issue court proceedings. Your solicitor will prepare and file the necessary documents with the court. The debtor will then have a chance to pay the debt or contest the claim.
  • Judgment and enforcement: If the court rules in favour of the creditor, a judgment will be issued against the debtor. There are various enforcement options available to recover the debt, including:
  • Writ of control: A writ of Control is a type of warrant used in debt collection which allow a High Court Enforcement Officer to seize assets.
  • Attachment of earnings order: Deducts the debt directly from the debtor’s earnings.
  • Charging Order: Secures the debt against the debtor’s property.
  • Third Party Debt Order: Freezes funds in the debtor’s bank account.
  • Insolvency Proceedings: In cases where the debtor is insolvent, your solicitor may advise pursuing insolvency proceedings as a means to recover the debt. This could involve issuing a statutory demand as a precursor to bankruptcy proceedings (for individuals) or winding-up proceedings (for companies).

What is a statutory demand?

A statutory demand is a formal written request for payment of a debt exceeding £5,000, served on an individual or a company. It is a precursor to insolvency proceedings and serves as a warning that if the debt is not paid, bankruptcy (for individuals) or winding-up (for companies) proceedings may be initiated.

Outcome of a Statutory Demand

  • If the debtor pays or agrees to a settlement within 21 days, the matter may be resolved without further legal action.
  • If the debtor disputes the debt on substantial grounds, they can apply to the court to set aside the statutory demand.
  • If the debtor does not respond or the debt is not settled, the creditor may proceed with bankruptcy or winding-up actions.

Bankruptcy Proceedings

If the statutory demand is not satisfied, the creditor can petition for the debtor’s bankruptcy. These proceedings are usually issued against an individual or sole trader. This involves submitting a bankruptcy petition to the court, outlining the failure to comply with the statutory demand and providing evidence of the debt.

The court will schedule a hearing to consider the petition. The debtor can oppose the bankruptcy on certain grounds, such as disputing the debt’s validity. If the court finds the petition valid, it may issue a bankruptcy order against the debtor.

Upon declaring bankruptcy, control of the debtor’s assets is transferred to a trustee in bankruptcy, who will manage the debtor’s assets and finances.

The trustee’s role is to sell the debtor’s assets and distribute the proceeds among the creditors, according to a legally defined order of priority.

Bankruptcy significantly impacts the debtor’s credit rating and ability to borrow money in the future. It also imposes restrictions on their business activities.

Bankruptcy is not permanent. In England and Wales, a debtor is usually discharged from bankruptcy after 12 months, releasing them from most of the debts owed at the time of the bankruptcy order. However, the impact on the debtor’s credit rating and financial status can last longer.

Winding up proceedings

Winding-up proceedings, also known as compulsory liquidation, is a legal process used to shut down a company that is unable to pay its debts. It involves the appointment of a liquidator who takes control of the company, sells its assets, and distributes the proceeds to its creditors.

This process is distinct from bankruptcy, which applies to individuals and sole traders, leading to the sale of personal assets to pay off debts. Winding-up proceedings are specifically for companies and other corporate entities.

The process typically starts with a creditor filing a winding-up petition in court if they are owed £750 or more and the company cannot pay. Other parties, such as the company’s directors or shareholders, can also initiate winding-up proceedings under certain circumstances.

How can the debt recovery solicitors from our panel assist?

Expert Commercial Law have a panel of solicitors comprising of firms with credit control and debt recovery teams. Most of the law firms on our panel will offer a debt recovery service on a fixed fee, hourly rate, or conditional fee agreement. This will be discussed at the outset of your case.

All of the solicitors on our panel have the experience and expertise required to take on your case. We only select the best in the business. All of our solicitor firms are authorised and regulated by the Solicitors Regulation Authority (SRA) and offer a range of funding options for your case.

We are not a firm of solicitors; we have a panel of commercial law solicitors. If you contact us in relation to a commercial law case, we will pass your case onto a panel firm.

Our panel can also assist with commercial issues such as business energy claimsshareholder disputes and contract disputes.

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Please note, we are not a firm of solicitors; however, we maintain a panel of trusted and regulated legal experts. If you contact us in relation to a commercial law case, we will pass your case onto a panel firm in return for a fee from our panel firms. We will never charge you for passing on your case to a panel firm. 

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