15th January 2021 -
Our commercial litigation team explores how Covid-19 restrictions and Brexit may affect your debt recovery options as a commercial creditor
Debt recovery is a sensitive subject at the moment given the ongoing difficulties being caused by the coronavirus. The Government is urging creditors to show restraint in order to avoid a tsunami of otherwise viable businesses being sent to the wall. However, with no end to the pandemic in sight, and Brexit poised to make trading conditions harsher for some, it is important that the thorny issue of debt recovery is addressed and tackled effectively.
‘Business owners and managers need to monitor debts closely and to have a plan of action which has regard to each individual debtor’s circumstances and is shaped by an objective assessment of their particular risk profile’ says Richard Shears, a dispute resolution solicitor and founder of Shears Law.
Among the many factors that you will need to consider when developing an appropriate debt recovery strategy, are:
Different strategies for different debtors
Having helped a number of businesses to devise debt recovery plans in recent months, we have begun to see a pattern emerging in the approach creditors are taking.
This can broadly be summarised as follows:
Of course, everyone’s circumstances are different and the issues facing your business may require a different strategy. For example, where the nature of your business dictates the need for existing commercial relationships to be preserved, the right approach may be to work more collaboratively with your debtors across the board. Conversely, where the accumulation of debt is threatening your continued survival, then it may be that your only choice is to adopt a more hardline approach irrespective of the reason(s) why your debtors may be struggling.
Debt recovery options
Among the possible debt recovery routes that you might consider pursuing are:
Covid-19 and Brexit
In deciding which debt recovery options are right for you, it is important to take account of whether coronavirus or Brexit should influence or shape your approach.
For example you might be keen to issue a statutory demand, but before electing to do this you need to be aware that:
Therefore, unless you are prepared to wait for these restrictions to be lifted, the use of insolvency-based debt recovery options may not currently be a feasible way to proceed.
Likewise, you may be minded to take an incremental approach to the recovery of monies you are owed. However, where the debts you are dealing with have been racked up by a foreign business located within the EU, then this may not be advisable to do given the uncertainty which exists around the continuation of reciprocal arrangements once Brexit has taken effect.
How our debt recovery specialists can help
Using our in-depth understanding of the commercial debt recovery process and the various forms that this may take, our experienced lawyers can help you to come up with a workable and effective debt recovery plan that maximises your chances of recovery and which is also sensitive to your own commercial needs.
With our help, you can categorise your debtors into those who can pay and those who cannot and target your response accordingly, depending on the debtor’s circumstances, their individual risk profile and your appetite and capacity to show tolerance and forbearance where this may be warranted.
For further information, please contact please contact Richard Shears on 0800 020 9495 or firstname.lastname@example.org.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.Back to News & Views