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Joshua
Joshua, Lawyer
Category: Law
Satisfied Customers: 26069
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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My business owes £26,000 to an financial company. The company

Resolved Question:

My business owes £26,000 to an financial company. The company I owe the money to are a business who give credit and pay your staffs wages. I am 3 weeks late on my last payment and they are saying they will start legal action against my company. I have told them I want to pay this debt of and if possible can we arrange a payment scheme. Can they force a winding up order on my company ?
Submitted: 3 years ago.
Category: Law
Expert:  Joshua replied 3 years ago.

Joshua :

For the avoidance of doubt I presume I am correct to conclude that this is a LTD co. we are discussing please?

Joshua :

Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.

Joshua :

Does your company owe other debts? If so roughly how much elsewhere?

Joshua :

How quickly could you repay the £26K? Have you given any personal guarantee or other form of security to the creditor?

Customer:

Yes I am a LTD company

Customer:

I use another company a payment agencies but make repayments to them as well I owe them only £5000 but pay them on a regular basis.

Customer:

Im not sure how quick I can pay off the 26K as I am owed a large debt and want to use this as payment. I hoped that £1000 per month would help to the payment company

Joshua :

Thanks. How son do you anticipate that the debt you are owed will be paid and is the debtor good for the money do you consider? Is the debt owed to you already overdue?

Customer:

Yes the debtor is good for the money I hope. The money owed to me is two months over due. I have told them this and tried to explain but I'm getting know where fast. Can they wind me up as a company ?

Joshua :

Thanks. A winding up order can be sought if your company owes more than £750 however it does not follow that one would be sought or granted. First of all it would cost circa £1000 for them to apply for a winding up order and (notwithstanding security or a personal guarantee) if the company does not have the funds to pay then they will not recover more than the company has in assets. In addition they will be treated in a pool with any other unsecured creditors and may therefore get a very limited sum.

Joshua :

Accordingly you can often avoid winding up proceedings by a frank and open negotiation with the creditor as to the company's assets and pointing to a temporary cashflow issue rather than serious debt problems for the company and attempting to negotiate payment terms including interest. On the basis the terms you are offering are not unreasonable many creditors will afford a degree of time. In any event it would take them the best part of 6-8 weeks to achieve a winding up hearing.

Joshua :

Having said this clearly there will need to be a focus on recovering the debt owed to your company by your debtor as the failure to pay this is threatening the financial wellbeing of your company. You can consdier using the commercial late payment regulations to charge both interest and instruct a debt collector - there is provision in the regulations to cover the agents fee. Alternatively you could consider your own heavy handed approach of threatening winding up proceedings against that debtor with the same above caveats.

Joshua :

If you are unable to reach agreement with your creditor you may consdier approaching a local insolvency practitioner to assist in managing your company's debt. Consideration can be given the a company voluntary arrangement or administration order though I would hope this would not be necessary on the basis that your company can pay its debts subject to unpaid debts owed being paid. However it is worth considering this approach if your creditor follows through with its threats which can at the very least buy some more time or serve to provide a solution to the present situation.

Joshua :

Is there anything above I can clarify for you any further?

Customer:

no thank you . you have been amazingly helpful. thank you again

Joshua :

A pleasure. I hope you are able to negotiate an amicable settlement to the position. If I can assist any further as the situation develops please do no hesitate to let me know.

Joshua :

If you have no further questions for now I should be very grateful if you would kindly take a moment to rate my service to you today. Your feedback is important to me. If there is anything else I can help with though please reply back to me though.

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