Portland Legal Debt Collection
Phone Portland Legal Debt Collection on 01489 ­550 496

It is inevitable that one, if not more of your customers will go bust owing you money.
There are a number of types of insolvency:

1. Bankruptcy (individual)
2. Individual Voluntary Arrangement
3. Company Voluntary Arrangement
4. Compulsory Liquidation
5. Creditors’ Voluntary Liquidation
6. Administration

In any insolvency a ‘trustee’ or ‘liquidator’ will be appointed to manage the sale or disposal of the debtor`s assets and make payments to the creditors. Trustees deal with individuals and sole traders, and liquidators deal with companies.

The trustee/liquidator can be either the Official Receiver or an insolvency practitioner (IP). The Official Receiver is an officer of the court and an IP is a licensed professional authorised to manage insolvencies.

If you are owed money by a bankrupt or a company in liquidation, you have to make a formal claim to the ‘trustee or liquidator’ in order to recover your money.

The normal outcome is that the debtor’s assets are divided amongst it`s creditors and the insolvent debtor is released from the burden of it`s debts. There is a strict order of priority when it comes to paying creditors, as follows:

1. Secured creditors – they hold a fixed charge or security on an asset
2. Fees and charges associated with the costs of the insolvency proceedings
3. Preferential creditors – for example, wages of staff or contributions owed to an occupational pension scheme
4. Unsecured creditors
5. Interest payable on any debts

Unfortunately, it is often that case that the debtor`s assets are insufficient to enable the creditors` claims to be paid in full and in some cases you may not receive any payment at all.

Once most formal insolvency processes are underway, you cannot start or continue any action to recover your debt, without the court`s permission. In most cases, there is little you can do except to wait to hear the outcome of the insolvency process.

However, as a creditor you can still take an active role in any insolvency which may make a significant difference to how much the Official Receiver or IP will be able to recover for you, but if your claim is large enough, you may also be able to determine who is appointed as trustee or liquidator.

For more information on the types of insolvency, how they effect your claim and your role within any insolvency procedure contact Paul Davies on 01489 550480.

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