Outstanding debts can have severe consequences for a business’s operations and, if the amount of money involved is significant, can have a considerable detrimental impact on an organisation’s bottom line.
If initial attempts to recoup any monies owed prove fruitless and invoices remain unpaid, several options are available to recover the debt.
At Muscatt Black Graf, our experienced team specialises in high-value commercial debt recovery and will advise on the best way to proceed.
We provide specialist legal advice that is commercially sound and tailored to your situation.
Here, our Dispute Resolution Lawyers look at the different options available to recover high-value commercial debts.
1. Mediation
Mediation is a form of alternative dispute resolution (ADR) that involves an independent, professionally trained third party (a ‘mediator’) helping two or more parties reach an agreement they are both happy with.
If you and your debtor cannot reach an agreement, a mediator can help to negotiate a solution.
Mediation is considered one of the most cost-effective ways to resolve disputes and recover a debt.
It is confidential, much faster than the litigation process and has various other advantages over pursuing a claim through the courts.
When parties reach a consensus through mediation or another form of ADR, the terms of how the debt will be repaid can be formalised in a settlement agreement, which your lawyer can draw up.
2. Letter of claim.
If ADR attempts are ignored, or the debtor cannot pay, your lawyer may suggest a letter before action (also known as a ‘letter of claim’) as the likely next step.
This is used to show that you have made efforts to resolve the issue outside of court, set out the amount owed and other details of the claim, along with the intention to start court proceedings if the debt remains unpaid.
In most cases, a strongly worded, well-drafted letter is sufficient to recover the monies owed.
It is crucial to seek specialist legal advice about letters of claim. Any mistakes made at this stage could result in the debt remaining unpaid and cause major issues further down the line.
3. Through the courts.
Using the litigation process to recover a debt is usually considered a last resort and generally only used once all other available options have been exhausted.
Taking a debtor to court can be expensive, lengthy and time-consuming. There is also no guarantee that you will win the case, and you may have to pay the other side’s costs if you lose.
If you win, you can obtain a judgment that is enforceable by a variety of methods depending on whether the debtor has assets which can be seized and sold; has property which can be charged; has earnings from which payments can be diverted; or savings which can be paid across.
4. Insolvency
A lawyer specialising in high-value debt recovery can help you draft a statutory demand asking for payment. A statutory demand is a document demanding money you are owed from a person or business. When a debtor receives a statutory demand, they have 21 days to either pay the debt or reach an agreement to pay.
This process should not be used if there is any genuine dispute over whether the money is owed.
A creditor can petition the court for a ‘winding-up order’ if a company cannot pay its debts. This is also known as compulsory liquidation.
Creditors can apply to the court to make individual debtors bankrupt. If the court makes a bankruptcy order, the debtor’s assets can be seized and sold to settle their debts.
Dispute Resolution Lawyers Marylebone
Our Dispute Resolution lawyers at Muscatt Black Graf deal with civil and commercial disputes and provide practical and pragmatic legal advice to ensure any disputes are resolved quickly and cost-effectively.
We specialise in high-value debt recovery cases and handle claims for debts above £100,000.
Muscatt Black Graf is a long-established specialist law firm of highly experienced lawyers who provide exceptional client care and straightforward advice.
For more information, please call 0207 586 1141, email contact@muscattblackgraf.com, or fill in our online contact form.
This blog was prepared on 11 December 2024. It is not intended to be advice and should not be relied upon as such.