Can I still take legal action to recover money that is owed to the business?
You will need to check the terms of the contract you have with the debtor to make sure you are still entitled to be paid (including checking any force majeure clause).
It is also important to remember that the current exceptional circumstances might also affect your contractual rights in other ways too – please see our commercial & contracts site for more information.
Depending on the type of debt you are owed, there might be some additional restrictions in place that you will need to consider. For example there are certain restrictions on landlords being able to forfeit leases, evict tenants or send High Court Enforcement Officers to collect outstanding rent.
Assuming there are no sector-specific restrictions in place then you should be able to start county or high court proceedings to recover the debt.
As an alternative to starting court proceedings, if the debt is undisputed a creditor can usually opt to issue winding up proceedings against a debtor instead. However, the recently introduced Corporate Insolvency and Governance Act introduces a temporary suspension on the ability of creditors to present winding up petitions to recover money unless the reason why the debtor cannot pay is not related to covid-19. For more information click here.
Often taking firm action is the right thing to do, particularly given that it is a sad reality that it is the creditor who shouts the loudest that will often get paid first. However, one important consideration is the commercial reality that many businesses (and indeed individuals) now find themselves in.
Whether taking legal action is likely to result in payment is always a question any creditor should ask themselves. Some creditors might also want to try to support their customers during these difficult times and/or have concerns about their long term reputation if they pursue the debt too aggressively. However, even if that is the case it is still possible to engage constructively and positively with those who owe you money to try to reach the best possible outcome. This could include:
- Having clear and consistent credit control processes in place
- Obtaining statements of means to help understand what a debtor can afford to pay
- Agreeing realistic payment plans
- Negotiating formal payment holidays
- Putting in place voluntary security to secure the debt
- Identifying those debtors who can’t pay as opposed to won’t pay and targeting resources accordingly
- Looking at what other options might be available, including recovering under parent company guarantees
Related FAQs
The Government expects the use of bespoke contractual documents to implement temporary arrangements relating to your PFI contracts.
With time and resource precious commodities, focus should be given to documenting:
- The key changes to your PFI requirements
- The temporary nature of the measures
- The requirement for best efforts on behalf of the PFI Contractor
- The importance of continued health and safety measures at all times
Every company has to file accounts at Companies House every year. If they are filed late, a fine is automatically levied. If there is a long delay in filing them, the directors are at risk of prosecution and the Registrar of Companies might start a process which could ultimately lead to the company being struck from the register.
However, Companies House has recognised that businesses might currently face exceptional problems in preparing and filing their accounts on time and so have posted a notice on their website which says that if immediately before the filing deadline, it becomes apparent that accounts will not be filed on time due to coronavirus, you can make an application to extend the period allowed for filing.
The reality of these unprecedented times is that enforcement of health and safety legislation by the HSE (particularly through the criminal courts) in relation to Covid-19 is an extremely unlikely outcome.
If you are eligible you will get a taxable grant of 80% of the average profits from the following tax years (where applicable):
2016-2017
2017-2018
2018-2019
HMRC will add the total profit in each of the three tax years (if applicable). This will then determine the monthly payment, subject to the cap of £2500.
The Government has produced workplace guidance for employers, setting out 2 key messages for employers:
- Continue to make workplaces as safe as possible; and
- Encourage workers to heed any notifications to self-isolate and to support them while they are require to isolate
Government guidance can be accessed here: How it works (an overview) and Workplace guidance for employers.