Debt Recovery During The Coronavirus Pandemic

At this current time, no one, from the big corporations, to the average Joe on the street, can say exactly what the impact of the Coronavirus pandemic will be on the country. There is, however, no doubt that it will be hugely damaging to the economy. This raises important questions for business owners about how they will continue trading. Cash is king at this time, and this raises a problem when businesses and individuals are owed money by other entities.

As the country adjusts to a lockdown, technology has allowed our firm to continue with ‘business as usual’. We therefore continue to offer our debt recovery services to our clients in spite of the nationwide uncertainty. The court system is also still functioning without appearance where possible. Although it is important to correctly pursue the appropriate manner of debt recovery, the court system remains in operation for proceedings to be issued to recover money due to businesses. The court system is adjusting its operations day by day, so this is subject to change, however we will always be in a position to give you advice on the latest developments

With businesses across the country facing uncertainty, it is important that your own business is protected as far as possible. Many types of businesses will have seen their income reduce dramatically as a result of the various distancing measures put in place. Even with the Government’s help, many industries will face uncertain futures. Some businesses may therefore genuinely be unable to repay debts for the foreseeable future, and this is something which can be analysed prior to commencing debt recovery.

It could be said that this is a time for reasonableness, and one option to recover debts from other companies is therefore a ‘Letter before Action’. This gives the other party notice of your intentions, and can lead to settlement discussions particularly in the current climate.  This would give certainty to both sides. This can be recorded in a settlement agreement and registered in the Books of Council and Session, therefore giving a higher degree of security to the arrangement.

It is important to ensure that your business is protected from the effects of the pandemic, and raising formal legal proceedings is an option which should be carefully considered prior to commencing. Caution should be exercised, and it should be appreciated that court proceedings usually run for an extended period of time, however, as above, raising a court action may be the necessary first step in coming to a resolution for a debt which is disputed or has just not been paid for another reason. If resolution is not possible, having raised proceedings as early as possible will ensure that the court process is completed as quickly as possible.

If you are concerned about the ability of your debtors to repay, you should be aware that in court actions you can ask the court for interim orders such as inhibitions over property and arrestment of bank accounts in order to protect your position and boost the chances of recovery if debtors are liquidated in the future. Starting this process as early as possible in this period of uncertainty will prevent unnecessary loss and hopefully allow your business to continue on a strong financial footing.  Getting this sort of thing right now while there is a lot of uncertainty will undoubtedly prevent expensive and time-consuming litigation in the future.

If you would like to discuss debt recovery procedures for your business, please do not hesitate to contact our on 0141 375 1222.