Customer Won't pay debt. What to do next...We'd prefer to make them cease trading? CCJ? Strike Off?

FrankFalcon

Hi all

Please pardon my business ignorance here but I am not sure what to do in trying to help out a relative who's very upset because his customer won't/can't pay.

The story goes...
My relative has a decent business buying and selling construction products.  He has had a particular customer for a few years who has always been slow at paying but he tells me he sort of took it on the chin because eventually he got paid.  Then, in Summer last year (2022) he sold around £2K of goods to the customer.  I'll try to make it a little easier but the top and bottom of it is that he has tried chasing the customer loads since with no joy (customer never answers calls or texts).  Then, finally, about 4 weeks ago (6 months later) the customer finally answered one of his calls and said "I'm sorry.  I'm going under.  I can't pay.  You will get a letter confirming it".  So, now my relative doesn't know what to do.  I told my relative to contact a solicitor but he told me "I did exactly this a few years ago for a customer that owed me £2K.  Eventually, the legal fees cost me £2,700 which only served to confirm the customer had gone bust and I never got the £2K the customer owed me".  So, as you can see because he was owed £2K he thought his solicitors would be able to get the money but he eventually lost the £2K and also the solicitor's fees, so instead of being £2K out of pocket he ended up £4,700 out of pocket.  So, to add to the mess we have recently discovered that this customer (who said he's gone under) is still blatantly trading in the same industry although we don't know if it is under the same name.  One contact even told us "You know he's an ex bouncer don't you?.  You won't be able to make him pay"

So, at this point, we genuinely don't know what to do.  We don't want to put it with solicitors who will simply charge us to tell us what we already knew.  We don't want to do nothing because the customer can then continue to trade and take somebody else's money.  What are our options? Is a CCJ relevant in this case?  Can we apply to have the company struck off or is this not relevant in this case?  Can we go after the man himself?

We are realistic and fully understand that some companies are genuinely struggling in this environment but we are certain this is not the case here.  My relative has many contacts in his industry who tell him the customer is swaggering around, carrying on trading as if nothing happened.  

When we check this guy's name on companies house the following shows up so we guess that he will say that one of his companies has gone under but the other one hasn't.  I reiterate that we don't want to kick somebody who may genuinely have lost his business but as I said we are certain this guy is taking the mickey.  

Any advice please? 

(Removed by Forum Team)

MattMattMattUK

FrankFalcon said:

Hi all

Please pardon my business ignorance here but I am not sure what to do in trying to help out a relative who's very upset because his customer won't/can't pay.

The story goes...
My relative has a decent business buying and selling construction products.  He has had a particular customer for a few years who has always been slow at paying but he tells me he sort of took it on the chin because eventually he got paid.  Then, in Summer last year (2022) he sold around £2K of goods to the customer.  I'll try to make it a little easier but the top and bottom of it is that he has tried chasing the customer loads since with no joy (customer never answers calls or texts).  Then, finally, about 4 weeks ago (6 months later) the customer finally answered one of his calls and said "I'm sorry.  I'm going under.  I can't pay.  You will get a letter confirming it".  So, now my relative doesn't know what to do.  I told my relative to contact a solicitor but he told me "I did exactly this a few years ago for a customer that owed me £2K.  Eventually, the legal fees cost me £2,700 which only served to confirm the customer had gone bust and I never got the £2K the customer owed me".  So, as you can see because he was owed £2K he thought his solicitors would be able to get the money but he eventually lost the £2K and also the solicitor's fees, so instead of being £2K out of pocket he ended up £4,700 out of pocket.  So, to add to the mess we have recently discovered that this customer (who said he's gone under) is still blatantly trading in the same industry although we don't know if it is under the same name.  One contact even told us "You know he's an ex bouncer don't you?.  You won't be able to make him pay"

So, at this point, we genuinely don't know what to do.  We don't want to put it with solicitors who will simply charge us to tell us what we already knew.  We don't want to do nothing because the customer can then continue to trade and take somebody else's money.  What are our options? Is a CCJ relevant in this case?  Can we apply to have the company struck off or is this not relevant in this case?  Can we go after the man himself?

We are realistic and fully understand that some companies are genuinely struggling in this environment but we are certain this is not the case here.  My relative has many contacts in his industry who tell him the customer is swaggering around, carrying on trading as if nothing happened.  

When we check this guy's name on companies house the following shows up so we guess that he will say that one of his companies has gone under but the other one hasn't.  I reiterate that we don't want to kick somebody who may genuinely have lost his business but as I said we are certain this guy is taking the mickey.  

Any advice please?

(Removed by Forum Team)

It does not matter what other companies he has, you can only attempt recovery against the one you issued the invoice to, that is the nature of limited liability. If the company does not have the assets then there is nothing to recover. You could hang on to see what the letter says, if it is just from him or from an insolvency practitioner, if it is the former then a CCJ might help, or might not, if it is the latter a CCJ is pointless. 

Grumpelstiltskin

Under no circumstances should your relative start paying a solicitor.

Unfortunately £2K  is only a small business debt and if the company is going under  then he will have to join the queue as I guess he won't be the only supplier in this position and if he is lucky he may sometime in the future get 1p in the £.

Sorry but that is a fact of business life.

ACG

Send a letter before action. 
If no answer, file it with small claims court. It will cost about £100-200 I think, google MCOL. 

There is also potential, you could try to go after the director personally. If he has been trading whilst insolvent it is a criminal offence, but I think you could end up wracking up legal fees for that and no guarantees of success. 

FrankFalcon

MattMattMattUK said:

FrankFalcon said:

Hi all

Please pardon my business ignorance here but I am not sure what to do in trying to help out a relative who's very upset because his customer won't/can't pay.

The story goes...
My relative has a decent business buying and selling construction products.  He has had a particular customer for a few years who has always been slow at paying but he tells me he sort of took it on the chin because eventually he got paid.  Then, in Summer last year (2022) he sold around £2K of goods to the customer.  I'll try to make it a little easier but the top and bottom of it is that he has tried chasing the customer loads since with no joy (customer never answers calls or texts).  Then, finally, about 4 weeks ago (6 months later) the customer finally answered one of his calls and said "I'm sorry.  I'm going under.  I can't pay.  You will get a letter confirming it".  So, now my relative doesn't know what to do.  I told my relative to contact a solicitor but he told me "I did exactly this a few years ago for a customer that owed me £2K.  Eventually, the legal fees cost me £2,700 which only served to confirm the customer had gone bust and I never got the £2K the customer owed me".  So, as you can see because he was owed £2K he thought his solicitors would be able to get the money but he eventually lost the £2K and also the solicitor's fees, so instead of being £2K out of pocket he ended up £4,700 out of pocket.  So, to add to the mess we have recently discovered that this customer (who said he's gone under) is still blatantly trading in the same industry although we don't know if it is under the same name.  One contact even told us "You know he's an ex bouncer don't you?.  You won't be able to make him pay"

So, at this point, we genuinely don't know what to do.  We don't want to put it with solicitors who will simply charge us to tell us what we already knew.  We don't want to do nothing because the customer can then continue to trade and take somebody else's money.  What are our options? Is a CCJ relevant in this case?  Can we apply to have the company struck off or is this not relevant in this case?  Can we go after the man himself?

We are realistic and fully understand that some companies are genuinely struggling in this environment but we are certain this is not the case here.  My relative has many contacts in his industry who tell him the customer is swaggering around, carrying on trading as if nothing happened.  

When we check this guy's name on companies house the following shows up so we guess that he will say that one of his companies has gone under but the other one hasn't.  I reiterate that we don't want to kick somebody who may genuinely have lost his business but as I said we are certain this guy is taking the mickey.  

Any advice please?

Mr K GXXXXXX

Filter appointments

Filter appointments

Current appointments

Total number of appointments 2

Date of birth

March 1980

XXX DEVELOPMENTS LTD (xxxxxxx)

Company status

Active

Correspondence address

xxxxxxxxxxxxxxxxxxxxxxxx (Appears to be the accountant's address)

Role ACTIVE

Director

Appointed on

28 April 2021

Nationality

British

Country of residence

England

Occupation

Director

XXX CONSTRUCTION (MANCHESTER) LTD (xxxxxxx)

Company status

Active

Correspondence address

xxxxxxxxxxxxxxxxxxxxxxx (Appears to be his home address)

Role ACTIVE

Director

Appointed on

31 January 2019

Nationality

British

Country of residence

England

Occupation

Director

It does not matter what other companies he has, you can only attempt recovery against the one you issued the invoice to, that is the nature of limited liability. If the company does not have the assets then there is nothing to recover. You could hang on to see what the letter says, if it is just from him or from an insolvency practitioner, if it is the former then a CCJ might help, or might not, if it is the latter a CCJ is pointless. 

We are of the opinion that the letter will never materialise unless we take action.

FrankFalcon

ACG said:

Send a letter before action. 
If no answer, file it with small claims court. It will cost about £100-200 I think, google MCOL. 

There is also potential, you could try to go after the director personally. If he has been trading whilst insolvent it is a criminal offence, but I think you could end up wracking up legal fees for that and no guarantees of success. 

So, we will probably send a letter before action.  However, we looked online and there are loads of different ones.  Which one do we use? Is there a specific template especially suitable in this case? We don't want to look silly by sending a letter that is not particularly relevant to this kind of debt.

Grumpelstiltskin

Like I said if the company has no assets then you are just throwing money away.

The director can be rolling in money but the company can be insolvent.

FrankFalcon

Grumpelstiltskin said:

Like I said if the company has no assets then you are just throwing money away.

The director can be rolling in money but the company can be insolvent.

Thank you.  I totally understand that but we think the advice gained here will prove positive because:

A: Taking into account that the Director may be wealthy and the company insolvent it is not right that this guy continues to trade whilst not taking us seriously.  Even if it costs us a couple of hundred Quid (small claims or MCOL) it will be worth it to stop his business and prevent him from doing this to somebody else.  Who knows, it may jolt him to pay?

B: It is clear that my relative has something to learn in this area and I think the experiences gained here may well educate him further.

Grumpelstiltskin

Even if you get a CCJ against the company it won't stop it trading.

He obviously knows he is sailing close to the wind but he is quite happy with this. Many people go through their business life setting up companies, owing people money and closing the companies down and then setting a new company up.

saajan_12

In terms of lessons to learn, could he take payment upfront, or at least have credit limits per customer, eg if the bill builds up to say £500, payment must be received before the customer can order more. 

Of course it might be better for your relative's business to take this chance if it encourages more custom, and if one or two don't pay then that's a risk they take. 

FrankFalcon

Grumpelstiltskin said:

Even if you get a CCJ against the company it won't stop it trading.

He obviously knows he is sailing close to the wind but he is quite happy with this. Many people go through their business life setting up companies, owing people money and closing the companies down and then setting a new company up.

Thanks Grumplestiltskin

Totally accept what you're saying and take on board your comments but I am not the sort of person to just lie down and concede defeat if there is even a slight chance of winning.  If you ask me what I am hoping to gain it is obviously the money.  However, I am certain we won't be getting it.  But, if I can ensure his trading name, reputation or business suffers so much that it prevents other people for losing money then so be it.  My reasoning is... I think back to a company I used to work for years ago that used a service called 'Risk Disk'.  The purpose of Risk Disc was to alert suppliers to companies/individuals/trading entities who had bad credit/gone bust etc.  My boss at the time swore by 'Risk Disk' and would never deal with any people that were flagged up.  So, let's say we hit him with a CCJ or a money claim etc.  Let's assume he then fails to pay.  My reasoning is that the judgement will still be out their, regardless of wether he pays or not?