Winding Up Petitions

If the debtor has sufficient assets to cover the debt owing to you, the taking of insolvency proceedings is a possibility. To do this, you have to have a judgment debt of sufficient size (£5,000) to commence proceedings for bankruptcy, or £750 to apply to put a company into liquidation. You can then issue a 'Statutory Demand for Payment'. This gives the debtor 21 days to pay the debt or 18 days to apply to the court to have it set aside. If neither is done, you can apply for the person to be made bankrupt or the company put into compulsory liquidation ('winding up').

This course of action is often effective because the outcome for the debtor is very severe. However, the procedure is relatively costly, and the recovery of any sum due depends on the cost and speed of the insolvency process as well as the value of the assets realised and the legal order of preference for paying off the creditors.

If your Ts and Cs allow it, you can recover from the purchaser any goods for which you have not been paid, provided these are identifiable as the items you have sold. Items sold that are incorporated into other products would not normally be able to be recovered.

The court may agree to allow you to take a legal charge over any assets (say a property), which will mean that you will be repaid (with interest) when the property is sold.

Freezing an asset is a means of stopping the asset being dissipated when proceedings are active and is used when you are afraid that the debtor may empty accounts and transfer the money in them somewhere where it cannot be found.

An injunction can be used to prevent the debtor taking actions which may have the effect of reducing the chances of getting paid or requiring the debtor to take specified actions if this would improve the chance of payment.

In some circumstances, it may be appropriate to obtain an 'attachment order', which means that cash coming into the debtor's account will be used to pay what is owed to you before being used for any other purpose.