Insolvency and Debt Recovery

Making a claim:

Issuing a letter before a claim

A letter before action (LBA) will generally be the most appropriate first step in attempting to secure payment of a debt owed to you.

We will write to the debtor requiring immediate payment of the money owed to you within a certain number of days and warning the legal action will follow if they do not comply.

If you are seeking payment of a debt owed by an individual to your business, a different process applies. In these circumstances, we would need to issue a letter of claim, which has some different requirements.

Our fees range from £120 to £375 per hour plus VAT, depending on the complexity of the claim and which solicitor deals with your claim.

Disbursements would include a £3 Land Registry fee to which there will be added VAT.

The process can take six weeks depending on the amount of information requested from you and the complexity of the matter.

Issuing court proceedings to obtain judgment

While a letter before action will often lead to a successful outcome, there are cases in which debtors do not comply by the specified deadline. In these circumstances, we can issue a claim in the County Court.

Typically, we will claim for the original debt, statutory compensation, interest and legal fees.

A copy of your claim will be issued by the court to the debtor, who will have 14 days to respond. They can either acknowledge the debt and pay within a further 14 days, admit the debt and agree on a repayment schedule, or by filing a defence or even a counterclaim.

Where the debtor fails to respond, we will request default judgment and then proceed with enforcement action against the debtor.

County Court Judgments (CCJs) can have a highly detrimental impact on the debtor’s credit rating. This will be listed on the Register of Judgments for six years.

Our fees range from £120 to £350 per hour plus VAT, depending on the complexity of the claim.

Disbursements would usually include the court fee of 4.5/5% of the debt, depending on how the case is issued

The time it will take to obtain default judgement will depend on how quickly the courts deal with the matter and the process usually takes between 8 weeks to 3 months.

Bankruptcy Proceedings (Statutory demand)

If you are seeking the repayment of a debt of £5,000 or more owed to you by an individual, you may be able to apply for bankruptcy proceedings.

Once a bankruptcy order has been made, the official receiver or trustee will take control of any assets belonging to the debtor in order to realise their value and distribute funds to creditors.

Our fees range from £120 to £350 per hour, depending on the complexity of proceedings.

Disbursements include service of the statutory demand, which costs between £100 and £300 depending upon the number of attempts required to affect services, court fee of £280 and petition deposit fee of £990. Service of the petition costs between £100 and £300 depending upon the number of attempts required to effect service, whilst advertising the petition online costs between £100 and £200 plus VAT. Counsel’s fees for the hearing will range from £300 to £750 plus VAT.

The process can take between six and 12 months, including any substantive court hearings. VAT may be payable on all disbursements, save for the court fees and deposit.

Winding-up petition

If a company owes you £750 or more and you can prove that the company cannot pay you, you can issue a winding-up petition.

If your petition is successful, the company will sell its assets, any legal disputes it is party to will be settled and the company will collect any money that it is owed. The funds will then be used to pay you and any other creditors.

Our fees range from £120 to £375 per hour plus VAT, depending on the complexity of the proceedings.

Disbursements include service of the statutory demand, which costs between £100 and £300 (plus VAT if the process server is VAT registered), depending upon the number of attempts required to effect service, court fee of £280 and petition deposit fee of £990, service of the petition, which costs between £100 and £300 (plus VAT if the process server is VAT registered), depending upon the number of attempts required to effect service and advertising the petition online, which costs between £100 and £200 plus VAT. Counsel’s fees for the hearing will range from £300 to £750.

The process can take between six and 12 months, including any substantive court hearings.

Debt Recovery – up to £100,000

The likely costs for dealing with a debt recovery case will depend on the amount of documentation involved, complexity of the matter and the stage at which the matter is completed. If debt is recovered at an early stage, costs are likely to be in region of £1,250 – £3,000 plus VAT.

If the matter however becomes more complex, with bankruptcy or winding up proceedings having to be issued, then costs can be in the region of £7,500 – £25,000 plus VAT and disbursements, of the type as referred to as above. If the debt is defended and the matter has to go to trial, then the costs can be in the region of £35,000 – £50,000 plus VAT. A detailed costs estimate will be given in each case depending on the specific set of facts and complexities involved. All services referred to above are included in this fee estimate.

Our litigation team is headed up by Stephen Silverman who has overall supervision of the team.

[Please note all VAT is charged at the prevailing rate of 20%]

Key Stages

The key stages and work involved in recovery of a debt will depend on whether the debt is disputed or not:

Undisputed debt

• Taking your initial instructions and reviewing documentation.
• Undertaking appropriate searches.
• Preparing and sending a letter before action.
• Receiving payment and sending to you, or if the debt is not paid, instructing junior counsel, drafting and issuing claim or statutory demand.

Disputed debt claim

• Taking initial instructions and reviewing documentation.
• Undertaking appropriate searches.
• Preparing and sending a letter before action.
• Receiving payment and sending to you, or if the debt is not paid, instructing junior counsel to assist, drafting and issuing claim or statutory demand
• Considering and advising on defence from the other party, if any.
• Preparing for and attending case management conference.
• Preparing and undertaking disclosure of documents.
• Taking and agreeing witness statements.
• Considering and advising on the other party’s witness statements.
• Agreeing a list of issues.
• Preparing for and attending at trial, including preparing instructions to counsel. (Please note this excludes any steps to enforcement and preparing a detailed assessment of costs.

Timescales

We are unable to provide an accurate estimate of the time it will take to complete the steps above. Matters can range from a few weeks to settle an undisputed debt claim to over a year for a disputed debt claim. Timescales will depend on various things including the complexity of the matter, how the debt deals with the claim and in the event that proceedings are issued, the court’s availability to deal with a matter.

To find out more about arranging an initial discussion or for more advice on our Insolvency and Debt Recovery services, please visit our contact us.