Creditors can legitimately be concerned that County Court proceedings will be slow and expensive, leading them to turn to the insolvency regime to apply pressure. An insolvency regime applies in different forms to debtor companies and individuals.
Being declared bankrupt would result in all the debtor’s assets being transferred to a trustee in bankruptcy, a ban on company directorships and the inevitable effects on his credit record.
For personal insolvency – bankruptcy – the first step to serve of a statutory demand; a written notice in a prescribed form demanding payment of a debt.
The demand has to be personally served on the debtor by a process server. The debtor then has 21 days to either to come to an arrangement with the creditor, to apply to court to have the demand set aside. A non-response will leave them open to a bankruptcy petition being issued against them.
So, being served with a statutory demand will increase pressure on the debtor and is a very effective method to recover a debt at an early stage.
Should payment not be received as a result of the statutory demand, the creditor can follow through with a bankruptcy petition through the debtor’s local court. A court date is set when the petition is issued, as well as a deadline for possible bankruptcy.
The costs involved in issuing a bankruptcy petition are substantial. Although the petitioner’s costs are paid out of the bankrupt’s estate in priority to his general debts, issuing a petition is not a decision to take lightly.
Working with our specialist partners and litagators we can :
arrange for a personal service by a process server in the serving of a statutory demand,
help with the preparation and presentation of a bankruptcy petition,
arrange representation by a solicitor at the bankruptcy hearing,
manage negotiations and mediation with the debtor on your behalf, seeking to obtain payment of the debt before the bankruptcy hearing,
undertake research on the debtor’s assets – for example, through title searches on property, and
ascertain, as far as possible, if there is a good chance of recovery of your costs and at least some of the debt.
For more information, free initial advice or a general discussion, please contact us on +44 (0)20 8202 0730.