Question before I issue a statutory demand

[humptynumpty]

We have a persistent non-payer and having chased invoices repeatedly and written letters demanding settlement we are about to serve them with a statutory demand. We ARE prepared to see the demand through to winding-up.

Customer is a slippery fish and I fully expect them to attempt get the SD set aside by disputing the quality of our work. The work in question is IT software development.

I am 100% sure there are no GENUINE grounds for dispute. We have comprehensive written records that he approved our work at the time it was carried out. During the course of our working relationship with the debtor there have been occasional technical problems with our work but we have comprehensive records showing that we have addressed all these in a timely manner. No further problems have been brought to our attention.

My question is this: is it acceptable and/or wise to copy the above paragraph on to the SD, so that the court will think twice before setting the SD aside?

How thoroughly does a court consider the facts of the case when setting aside? Does the creditor get an opportunity to appear in court to state why he believes the dispute is not genuine?

I repeat I am 100% convinced that our work IS of am acceptable standard and we have written records showing our customer approving it.

I am also 100% convinced we would win a case and that the 'reasonableness test' would be very clearly in our favour. But I don't want to be in breach of the process on a technicality nor be perceived to be misusing the court system.*

The non-payment of this debt has crippled our cashflow and we cannot afford legal advice.

Any comments welcome!

 

[Charlie B ACS]

In my opinion, just stating the debt is owed is sufficient, don't give him any more ammo.

If he does try to have the SD set aside then make your submission.

Before you start any action, have you credit checked your client, to make sure he has some assets to recover, if he doesn't you will be throwing good money after bad.

My other question, you can't afford legal advice, but have the cash to get a winding up petition, seems slightly at odds. :|

In the first instance, i would consider the county court route, then using HCEO, or Sherrifs as they used to be called, who are far more effective than Bailiffs.

 

[KMD]

HN - I have PM'd you. Happy to provide a free comprehensive business report. This will indeed confirm if the 'business' has assets. Good advice from Charlie re sherrifs if and when it comes to enforcement..

 

Do you mind me asking how much the debt is for?

 

[Frenchconnect]

You need to examine your terms and conditions. If the customer accepted that the goods were delivered and working satisfactorily as you state, then payment must be made within your specified terms.

Also find out the financial situation of your customer. Is he not paying because he has cashflow problems? Maybe he is trading insolvent. If so a stat demand is appropriate.

It would be wise to use the arbitration service to resolve this matter rather than issuing a stat demand in the first instance. You can always issue the sd later.

Also it may be beneficial to have a third party expert confirm that the product is 'fit for its purpose' before you issue a sd. Once you have a third party opinion stating the product is fit and the customer still refuses to pay, the courts will be more likely to issue the stat demand.

Please note that the Courts are clear that a stat demand should not be used as a leverage for payments.

Kind regards

I am a Graduate member of the Institute of credit management.

 

[termsandconditions]

In the first instance, i would consider the county court route, then using HCEO, or Sherrifs as they used to be called, who are far more effective than Bailiffs.

I would agree with this. Once you have the CCJ, upgrade the warrant to a High Court writ and send in the HCEO guys; have a contact of a good one if you want some help there.

As soon as they start unplugging things, cash appears as if by magic.

Best Regards

 

[humptynumpty]

Brilliant advice, thanks very much all.

I've checked out the creditworthiness of the company, surprise surprise it says "maximum risk" and they are in the 1% of companies most likely to fail. They were much lower risk when we started trading with them!

I can see from the credit report that there are 3 existing CCJs on the company. All are in the last 4 months and all none is closed or satisfied.

Interestingly all 3 CCJs were lodged at the same county court, which is some distance from our customer. This suggests to me that they might all have been lodged by the same supplier, which in turn would suggest that on at least 2 occasions the customer paid up when the CCJ arrived, or else surely the supplier would never have gone on to supply them again!

The problem with the dispute element is that the customer will not be SPECIFIC about what is "wrong" with what we've done. In every letter I've written I've invited them to tell me what the problem is and that we will look in to it, but they haven't. To my mind, if you have a genuine dispute you will be very willing to say what it is!

Ample written evidence in our favour and actually it seems more clear-cut than I first thought. As suggested here and from other sources we are going to obtain CCJ first.

Thank you all for your help and advice and I will keep you posted...

 

[GRDCredit]

Interestingly all 3 CCJs were lodged at the same county court, which is some distance from our customer.

Was it in Northampton? Most CCJs these days are granted there:

http://www.hmcourts-service.gov.uk/bulkcentre.htm

I think the key to this is the level of debt, which I don't think you have mentioned. Can you afford to lose it as, to be frank, it looks like you are going to.

The killer here is three unsatisfied CCJs and you are going to try and get another one!

 

[humptynumpty]

Ah, yes, it was in Northampton so maybe my conclusion doesn't hold water.

The debt is several thousand. The previous CCJs are all much smaller. They are all on the credit report but none of them is listed as closed or satisfied.

What does "closed" mean?

I am not for a moment expecting that the money will be quick to obtain, but surely once we get the CCJ it is just a question of enforcement, seizing assets etc... and if they have been knowingly trading insolvent then can one not pursue the directors personally?

 

[Frenchconnect]

If you can prove that the company has been trading whilst insolvent, then the directors are at risk of being disqualified.

You should also be aware that the company has unsatisfied CCJs and therefore your CCJ will be dealt with after the others. You should also check the financial report for asset value. Hopefully the company assets will cover the amount of all of the CCJs.

 

[humptynumpty]

If you can prove that the company has been trading whilst insolvent, then the directors are at risk of being disqualified.

What is required to prove that?

Logic would suggest to me that since a CCJ results in an order to pay, anyone with an unsatisfied CCJ is insolvent by definition? Therefore if they are still trading now, and have not paid their CCJs, they are knowingly trading insolvent?

You should also check the financial report for asset value. Hopefully the company assets will cover the amount of all of the CCJs.

They're in a worse state than when the last accounts were filed, but knowing their setup and premises, I'd be pretty sure there would be enough fully-owned assets in there to satisfy all the CCJs and more besides.

You should also be aware that the company has unsatisfied CCJs and therefore your CCJ will be dealt with after the others.

I don't see why. My intention (as suggested by termsandconditions) would be to upgrade the CCJ to a writ and instruct an HCEO to go in and sieze assets. My understanding from the HCEOA website is that they would collect whatever they can towards satisfying my CCJ. Isn't it up to the other CCJ claimants to get theirs dealt with in a similar fashion?

 

[Frenchconnect]

Its the Official Receiver who decides whether to prosecute a director for knowingly trading insolvent.

Also it should be noted that insolvent trading and temporary cashflow problems are not the same.

You need to examine the financial report. Has the company got sufficient assets to cover its liabilities? Does the company own property? Try and establish why the previous CCJs have not been satisfied. Speak to the local bailiff.

Once you have all this info, you will able to decide which legal action is appropriate.

 

[humptynumpty]

You need to examine the financial report. Has the company got sufficient assets to cover its liabilities?

The report says:
Total Fixed Assets £118,584
Total Assets £846,955
Total Current Assets £728,371
Total Current Liabilities £563,066
Net Current Assets £165,305
Long Term Debt £27,506

but that was for year ended 2008 and I suspect things have got worse not better.

Does the company own property?

I believe they have a 10-year lease on three large buildings. There are no mortgages listed on the financial report.

Try and establish why the previous CCJs have not been satisfied.

I know that the company's cashflow is shot to bits. They were heavily reliant on credit from suppliers, which has steadily been withdrawn as their financial position has worsened and the suppliers have lost patience one by one.

They do still have a good solid order book from some regular customers though so in theory I would have thought the business should be profitable. Makes me wonder if a third party debt order could be appropriate?

The other factor is time, one of the CCJs was issued in September 2009, one last month and one last week! So they are all relatively recent and I suppose they might still be the subject of payment plans or whatever.

Speak to the local bailiff.

Is the local bailiff the person listed on the 'members' page of the HCEOA website? (I'm not allowed to post links on this forum yet.)


I really appreciate all the input here.

 

[Frenchconnect]

I would advise you to issue your CCJ. They have sufficient assets to pay.

 

[humptynumpty]

Thank you. That's what I'll do.

Thank you all for your help, and I'll keep you updated