So you have obtained your judgment and you cannot get the Defendant to pay. The High Court Enforcement officer has been to the judgment debtor’s property and cannot make contact. You don’t know where there are bank accounts or what is in them. At this stage, it always seems that the successful Claimant has to do all of the work with limited chances of success but that is not entirely true.
If the judgment is for more than £750.00 you have the option of threatening your debtor with insolvency by serving a statutory demand. It is the first step towards making an individual bankrupt or placing a company into liquidation. The demand can be prepared quite cheaply. There is no Court issue fee to pay and apart from getting the demand drafted, the only real expense is paying a process server to attempt personal service on an individual. For a company, this is easy. The demand can be left at or even posted to the registered office.
When that is done, the debtor has to move. If the demand is not satisfied within 21 days you can issue a winding up or bankruptcy petition. After you have done that the debtor is not going to escape bankruptcy or liquidation without paying the debt and your costs. Unless the debtor has so little in the way of assets and so much in the way of debt that getting rid of all of it would be the better option you will almost certainly get paid and you get your costs back quite quickly.
Let us be clear. You do not want the company wound up. You want to threaten it with annhilation in order to get your money quickly.
There is even more pressure to settle before the petition is advertised in the London Gazette. After advertisement, the company’s bank account will probably be frozen and any other debtors are likely to come crawling out of the woodwork. It places enormous pressure on the debtor to settle. Even if a business is successfully keeping its creditors at bay the isssue of proceedings that are likely to result in a business insolvency can spell an end to credit, the freezing of the bank account and certain loss of the business.
An individual bankruptcy places nearly all of the debtor’s assets under the control of the trustee in bankruptcy. A corporate business insolvency has a similar effect.
There can be problems. For example, a company which pays after advertisement will probably need to apply to the Court for a validation order to approve (retrospectively) of settling the debt. This is the debtor’s problem and not yours.
Litigation solicitors will advise that statutory demands should be approached with caution. If the debt is disputed an individual can apply to have it set aside within 18 days of service. A company can apply for an injunction to restrain the creditor from issuing a petition. In either case, it is likely that the Creditor will have to pay the costs of that application. Howver, if you base the demand on a judgment you are at no risk on costs even if the Debtor can persuade the Court to set judgment aside on the basis that there is a defence with a reasonable chance of success. This is not to say that a judgment is always necessary to use the statutory demand as a debt collection tool. It is just more dangerous without one.
If you face problems with collecting a debt or enforcing a judgment consult a litigation solicitor with expertise in this field for advice on whether it can help you.
If you have been served with a statutory demand or even a winding up or bankruptcy petition it is very important to take insolvency advice and to deal with the issue quickly if you want to save a huge amount of money in trying to sort it out later or, indeed, if you don’t want to lose everything to your creditors.