SPONSORED CONTENT JOINING THE DOTS A joined up approach to recovering debts with Shoosmiths and Menzies. Brave | Curious | Resilient / www.cicm.com / <strong>September</strong> <strong>2023</strong> / PAGE 46
Guiseppe Parla Lucy Sanderson Kim Achurch Paula Swain YOUR overdue debts are increasing, and you recognise that your credit control process needs some external support to try to unlock payment in these tough economic times and you are interested to know what Shoosmiths collaborating with Menzies can do to help and how they can work together to try to achieve a recovery. First Things First Shoosmiths start their relationship with you by understanding your business, exploring your processes, and how they can effectively plug in with their support. This will include giving you comprehensive advice in relation to your debt recovery options. Shoosmiths will look at previous engagements with debtors, average debt size, debt age and type, and categories of debtor. They will advise you on the best way to try to obtain payment. This will either be via court proceedings (for debt collection) or via an insolvency route. A Winding Up Petition (“Petition”) can be presented at court when a company is unable to pay debts as and when they fall due and when demanded. A Petition cannot be presented if there is any dispute, although in some circumstances it can be presented for a proportion of the debt.* Before a Petition is presented, Shoosmiths will check that there are no other active Petitions presented against the company. If it transpires that a Petition has already been presented, a Notice of Intention to Appear can be sent to the Petitioner. If the Petitioner later seeks to withdraw or dismiss, Shoosmiths can seek permission of the court for you to be substituted as the Petitioner allowing you to continue with the proceedings. Demand for payment Providing there is not an active Petition, Shoosmiths will either arrange to serve a Statutory Demand or send a written demand for payment. If the company can pay, then a demand is often an effective option for unlocking payment. It is not a requirement for a Statutory Demand to be served prior to presentation of a Petition, but it is a cheaper option as there is no Court fee. The Statutory Demand itself may prompt payment but if the company fails to pay within 21 days, the company is then deemed insolvent with practically no Before a Petition is presented, Shoosmiths will check that there are no other active Petitions presented against the company. defence to a Petition being presented. On the downside, it gives the company 21 days before further action can be taken. A demand for payment of any number of days can be used to support presentation of a Petition, however a company can dispute Petition proceedings if a demand letter is sent rather than formal service of a Statutory Demand. Shoosmiths will provide you with advice on the best option for your debt. If the debt remains unpaid following either demand, the company could apply to the court for an Injunction to prevent the presentation of a Petition to avoid the negative financial consequences. The Petition If a demand does not prompt payment, and no injunction restraining a Petition is granted, Shoosmiths will prepare and present a winding up petition to the High Court via its efficient online portal. Once a Petition has been presented, insolvency law has the effect of voiding any financial disposition of the company. The company’s bank account is likely to be frozen. This would have severe consequences for the company if they are seeking new finance as an advertised petition would come to the attention of their prospective lender. After presentation, the Petition will be listed for hearing to determine if a winding up order should be made. Shoosmiths will arrange service of the Petition and the hearing date on the company. At this stage, the company could apply to the court for an order restraining advertisement of the Petition, again to avoid negative financial consequences. Assuming no order has been made to restrain advertisement, details of the Petition and upcoming hearing will be published in the London Gazette, which Shoosmiths will arrange on your behalf. At this stage, other creditors might contact Shoosmiths to lodge notices of support for the petition. It is not uncommon for a debtor company to move forward with a company voluntary arrangement, administration, or voluntary liquidation at this stage. If no alternative insolvency process is proposed by the company and the debt remains unpaid, the Petition will proceed to its hearing date (typically 8-10 weeks from the initial demand). Shoosmiths will arrange an advocate to attend the hearing to seek that a winding up order is made against the company. Brave | Curious | Resilient / www.cicm.com / <strong>September</strong> <strong>2023</strong> / PAGE 47 continues on page 28 >
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