Thursday, 5 February 2015
Debt recovery steps up a gear
The risk of being served with a winding-up order by creditors is greater than ever, according to Andrew Oranjuik, of Martin-Kaye Solicitors in Telford.
He said: “The traditional way of recovering a debt always used to be bringing proceedings through the county court or High Court. But increasingly, creditors are seemingly more willing to serve a statutory demand, or winding-up petition, to claim the money they are due.
“Although this option has always been available, it has become far more prevalent as businesses step up efforts to recover outstanding debts as quickly and efficiently as possible. Court proceedings can take a considerable time to resolve, but serving either a statutory demand or a winding-up petition will bring the matter before the court much more quickly.”
Under current legislation, a company is deemed to be insolvent if it is served with a statutory demand and neglects to pay the outstanding amount, or reach agreement, within 21 days – even if it’s not actually insolvent.
Mr Oranjuik said: “If it gets to this stage, the creditor can use its demand as a basis to place the business into liquidation.
“There are measures which debtors can take to protect their position, however. If there is a legitimate dispute, they can contact the creditor at the earliest possible opportunity and ask them to confirm in writing that the demand is withdrawn. If this request is refused, then a court application can be made to prevent the creditor from either beginning or continuing winding-up proceedings.
“If a business finds itself being served with a statutory notice or winding-up order, it is important for them to take specialist legal advice immediately. Our commercial team has many years’ experience dealing with cases like this, and companies should ensure they take action as soon as they can or face serious consequences.”