When a business is faced with an insolvent debt there could be a number of options available to them, depending on the type of insolvency concerned. Dealing with this situation can be frustrating as you may be faced with uncertainty over whether any of your debt will be repaid plus there is usually paperwork to complete and creditors meetings to attend, involving you in further time for which you are unlikely to be paid.
One solution is to seek assistance and advice as soon as you become aware that a business debtor has entered a formal insolvency process such as:
- Individual Voluntary Arrangement (“IVA”)
- Compulsory Liquidation
- Voluntary Liquidation
- Company Voluntary Arrangement (“CVA”)
This will enable you to ensure opportunities are not missed to:
- Submit your claim in the insolvency
- Commence the process to claim VAT Bad Debt Relief
- Attend creditors meeting in person or
- Nominate a representative (“proxy holder”) to attend on your behalf
- Appoint an Insolvency Practitioner of your choice if appropriate
At a creditor meeting the opportunity is available to question the directors (Voluntary Liquidation or CVA) or business owner (IVA) on the reasons for the failure and any dealings you had with them as creditors.
This may assist in any retention of title claims you are pursuing and will also enable the insolvency practitioner (“IP”) to gain a better understanding of their conduct pre insolvency in the event the IP is obliged to issue a report to the Insolvency Service or pursue any claims for wrongful trading.
The option is also available to contact your advisor for guidance and assistance with any general insolvency related queries that come to light, be they pre or post any insolvency scenario. We can also liaise with other insolvency practitioners on your behalf to assist with any specific queries.
In such situations you may also be considering taking proactive action against debtors such as:
- Letters before action
- Issuing proceedings
- Obtaining judgment
- Petitioning for bankruptcy or Winding Up
- Charging Orders
Before doing so it is important take sensible and tailored advice in order to pursue the option best suited to your particular circumstances.