01

Blog

Norling-triangle-Orange

How to Get Paid from a Debtor Company

It can be very frustrating when you provide goods or services and the debtor company doesn’t pay.

Perhaps they can’t pay. Perhaps they won’t pay.

But you have provided the goods and services and the debt is due and there is no dispute.

Here, we discuss the #1 strategy to get paid from a debtor company.

We discuss the actions that are needed to dramatically increase your chances of getting paid.

Timeframe and Demand

The first step in this powerful strategy is to send a demand to the debtor company, providing them with a clear timeframe for payment. It is recommended to give them 15 working days to settle the outstanding invoice. This demand serves as an official notice and emphasises the importance of timely payment.

Statutory Demands and the High Court

If, after the demand, the dealer company still fails to pay the invoice, you have the legal right to apply to the High Court for an order of liquidation. However, before taking this step, it’s crucial to understand the power of statutory demands. These legal documents are widely recognised and usually result in payment, without the need to involve the court system.

The Pressure of Liquidation

Applying for liquidation puts significant pressure on the debtor company to pay what they owe. Nobody wants to see a company go into liquidation, but it is essential to leverage this option to ensure prompt payment. By initiating liquidation proceedings, you send a clear message that you are serious about collecting what is owed to you.

The Debtor’s Window of Opportunity

Once the liquidation proceedings are served, the debtor company has a vital window of opportunity. They have 10 working days to appoint their liquidator. During this period, it is essential for you, as the creditor, to remain silent and not push the debtor company. Pushing them during this time may lead them to appoint a sympathetic liquidator who may not prioritise your interests as a creditor.

Accommodating Requests and Out-of-the-Box Solutions

While the ultimate goal is to get paid, you may encounter situations where the debtor company requests additional time to pay. In such cases, it is advisable to consider accommodating these requests, but not without some form of exchange. This could include a personal guarantee from the company directors, a contribution to costs, or other creative arrangements that protect your interests.

The Importance of Liquidator Selection

If all else fails and the debtor company still refuses to settle the outstanding invoice, it is crucial to appoint a liquidator known for pursuing the rights of creditors. This choice is significant, as a competent and dedicated liquidator will work diligently to maximise your chances of recovering what is owed. Make sure to research and select the right liquidator who has a proven track record in securing creditor rights.

By following this comprehensive strategy, you put significant pressure on the debtor company to pay what they owe, ensuring a greater likelihood of recovery. While liquidation is not the ideal outcome, it is sometimes the necessary course of action to protect your business’s financial interests.

Remember, the goal is always to get paid, not to liquidate the company. Accommodating reasonable requests, exploring out-of-the-box solutions, and selecting the right liquidator can all contribute to a more favourable outcome.

At Norling Law, we use these strategies frequently to put our clients in the most advantageous position when it comes to the collection of amounts owing to them. If you are having problems being paid by a debtor contact us for a FREE 30-minute legal consult where we can discuss the issues.

02

Author Profile

Norling-triangle-Orange

Book a free consultation to get clarity on your options and next steps

Google Rating
4.8
Based on 84 reviews
×
js_loader

Book Your Free Consultation

Book your Free Consultation
with Norling Law

We’ve been guiding people through times of uncertainty since 2015. Talk to us for free to see what we can do for you.