Debt Help

[TimoWerner]

Hi All,

I can see there are some very educated people on here and whilst we seek legal advice want to get an opinion on an issue we are having.

1) Customer paid us £20k for some goods
2) Supplier couldn't supply the goods to us which we were going to supply to customer
3) Supplier needed to time to get the goods but ultimately could only fill 30% of said order
4) Customer asked for money back ; of which only £7.5k could be returned
5) Customer is now chasing for the remaining £6.5k but their legal guy is demanding a further £5k (we did take some time to return the funds as we had used them pay the supplier and then had to wait for the funds to be returned).

We are refusing to pay the legal costs of £5k but happy to pay the remaining. But the legal rep is saying if the whole £11.5k is not paid then they will seek a CCJ or winding up petition.

Is there any way to object this or do we have to lawyer up to dispute the £5k? Surely common sense has to prevail...

 

[MikeJ]

How have they come up with the £5k? If they've just made it up, then the debt doesn't exist.

 

[fisicx]

@TimoWerner - Have you spoken to your own solicitor?

 

[TimoWerner]

How have they come up with the £5k? If they've just made it up, then the debt doesn't exist.

They are saying interest and admin fees - it's a bit unnecessary and they've only sent me 1 letter!

 

[TimoWerner]

@TimoWerner - Have you spoken to your own solicitor?

I don't have one yet but have a call booked with one tomorrow. Just trying to settle the matter as business people as opposed to having to deal with a winding up petition !!

 

[Mark T Jones]

The starting point - always - is contract terms, in particular,was there a purchase order? What did it say?

Otherwise, to make a claim that will need to substantiate it.

My likely approach would be to settle the balance and tell them to whistle for their £5k

 

[Paul Kelly ICHYB]

My likely approach would be to settle the balance and tell them to whistle for their £5k

That's about it.

The circumstances of how you got to this position are not that relevant. You owe the money, so pay it!

BTW, what do your terms and conditions say about handling this?

 

[TimoWerner]

The starting point - always - is contract terms, in particular,was there a purchase order? What did it say?

Otherwise, to make a claim that will need to substantiate it.

My likely approach would be to settle the balance and tell them to whistle for their £5k

Thanks Mark - I get the feeling the legal chap wants his commission and as far as I'm concerned I have nothing to do with them.

There was no PO only an e-mail. We just provided an invoice which was paid in full by the customer but unfortunately we couldn't obtain the goods promised by our supplier.

We only worked off the invoice with no contract terms ; just my e-mail/verbal agreement to supply the goods.

 

[Lisa Thomas]

It will cost them more than £5k to liquidate you and then they will likely not get anything. Where have they magicked up the £5k from - what does the contract say?

 

[Paul Kelly ICHYB]

We only worked off the invoice with no contract terms ; just my e-mail/verbal agreement to supply the goods.

And this is what happens when you do not have the basics in place. I have them on a business where the average selling price is probably £40!

 

[TimoWerner]

And this is what happens when you do not have the basics in place. I have them on a business where the average selling price is probably £40!

Thanks Paul,

In hindsight it would have been good but we have been working this way for 10 years. We will get this amended on our Xero docs ASAP!!

I think @Mark T Jones is correct because as far as I am concerned the amount owed is to be client only and no legal firms.

 

[Paul Kelly ICHYB]

When you are dealing in orders of multi thousand pounds, you need to protect yourself as much as possible. Sadly, you are not alone, as many businesses only see the need in this with hindsight.

I do hope you get this resolved quickly, without additional cost.

 

[TimoWerner]

It will cost them more than £5k to liquidate you and then they will likely not get anything. Where have they magicked up the £5k from - what does the contract say?

Hi Lisa,

Thanks for providing some reassurance.

They are saying it's due to interest and admin fees. They have only sent me 1 letter though! It's a bit excessive but guess they are employing scare tactics.

Our contract was only an invoice which I provided and verbal/e-mail agreement to supply the goods. We weren't able to fulfil the whole order as mentioned and made an effort to pay them back.

Thanks.

 

[Lisa Thomas]

Ask them under what law or contractual terms they are charging the interest and fees and evidence to support this.

 

[Lisa Thomas]

What did their c£13k get spent on, why can't you repay it?

Sounds like you might need insolvency advice if the business has bigger problems and has already spent this money and cannot repay it.

 

[TimoWerner]

What did their c£13k get spent on, why can't you repay it?

Sounds like you might need insolvency advice if the business has bigger problems and has already spent this money and cannot repay it.

Thanks for getting back to me.

Initially it was given to our supplier for the goods but since then it has been returned. We have returned 8k and require to pay the customer a further 5k. It's just the £5k on top we don't want to pay!

We are solvent but we have a few clients who owe us money and our preference would be to divert those funds to paying the remaining balance or paying in monthly instalments.

It's just the threat of a CCJ or winding up petition which is causing me sleepless nights.

 

[Ryan Paul]

Ignore the 'Legal / Solicitor fees'. Your customer has appointed a rottweiler of a solicitor with heightened charges.
Pay back what your client is entitled to as per the original agreement and move on.