Success story: Recovering owed debt in under 24 hours

By Hiatham Javaid, Senior Litigation Executive

The pandemic created a lot of uncertainty in the business community, which led to changes for businesses across the globe, unfortunately including restructuring and liquidation for many.

One company, a longstanding client of ours specialising in wholesale clothing manufacturing, had to deal with the knock-on effects of this, so they turned to us to help them with the recovery of their unpaid invoices and owed debts.

The challenge: Goodwill led to being taken advantage of

Working in the manufacturing and retail industry meant many of their customers were negatively affected by the global pandemic, and were going through company restructures or considering liquidation. This was worrying for our client as one of their customers had several unpaid invoices due to the sum of £150,000, which they couldn’t afford to ignore.

Our client had afforded them some leniency and extended their payment terms, however the situation and outstanding debt quickly snowballed. They were struggling to get hold of their customer and were unable to set up a meeting with them to discuss how to move forward.

The lack of communication was concerning, particularly as the client was aware they had other outstanding debts they were being chased for and their customers parent group company was considering restructuring plans including potential dilution and liquidation.

The Primas Solution

Given what we knew about the company’s lack of financial stability and potential restructuring plans, time was of the essence. We knew if we did not act swiftly our client could potentially receive nothing if the company decided to take liquidation or dilution routes.

We were also conscious that if we issued a winding-up petition as a means of claiming the outstanding debt back, the parent company would have to reveal this to their bank, which could also negatively impact the outcome on our client.

This would have meant the bank account would have been frozen so no more payments could be made from the account while it was being investigated and would have elongated the process for our client. It would also make other creditors aware they were in trouble, potentially starting a snowball effect of more and more claims against the company.

Our approach was to strike fast and strike hard, we wanted immediate action and a swift result from the debtor. We set out our position and expectations for them and sent them a draft of our winding up petition in case this ended up being our only option, so they knew they were serious.

As it was a well-known company, the publishing of a winding up petition had the potential to receive a lot of publicity, therefore negatively affecting the customers reputation, which we knew they would not want.

A Successful Outcome

We managed to get the opposing party to agree to pay the full amount of all the outstanding invoices within 24 hours. An outcome our client was very happy with considering they could have very easily received no money towards the debt.

By instructing Primas, this gave our client the gravitas needed to ensure their customer took the matter seriously and responded in a timely fashion, where the client had previously been struggling to get any form of two-way communication going with them.

If you’re facing a similar situation and you’re looking for the best way to approach it, please contact our dedicated recovery team directly by emailing Hiatham.Javaid@primaslaw.co.uk.