My Customer Has Ceased Trading - What Can I Do to Recover My Money?

Updated: Sep 9


Trading in the “new normal” is fraught with difficulty for many businesses. The uncertainty, and the complete stop that we have all had to endure in so many businesses is unheard of. Even the savviest of business owners have been caught out by the pandemic. So, if you feel like you have “caught a cold” then you can take heart that “you’re not on your own”!

Lockdowns have caused so many businesses to literally “hibernate” from their situation. They are not failed businesses, but they have ceased trading. The impact of this on your business is that your own cashflow may have been impacted by customers not paying you, so in turn you can’t pay your suppliers and your overheads.

Ceased trading is a twilight zone between trading or not – and we think it needs to be looked at carefully, so you extract what you are owed as quickly as possible. Ceased trading situations can move into insolvency situations overnight – and you have probably seen big corporates sheltering under an insolvency measure.

As High Court Enforcement Officers we are often asked to go and check out a shop or warehouse which has gone into a “ceased trading” or hibernation status. The plus point on these cases is that when companies do hibernate, they often leave their stock and business equipment in place. This means we can help creditors use the leverage of a High Court Writ to get back what they are owed without going near an insolvency measure.

So, to stay ahead of what we might call “the insolvency curve” the first question to ask is "what do we mean by ceased trading?” Are we talking about a business that has left its trading address leaving cardboard boxes on the shop floor, or are we talking about a business which has left an empty office, warehouse or pub behind?

To make sure the target of any action – whether it’s a business or an individual – hasn’t yet become insolvent – you can make some simple online checks.

For an individual, you can check the Individual Insolvency Register.

To check the insolvency of a company or limited liability partnership you can check Companies House on this link. Both these registers will show if your debtor is insolvent

For partnerships it is worth checking both the Individual Insolvency Registry and this link for partnerships to see what is happening that this type of business (see https://bit.ly/2PxyBpm).

As Shergroup has been operating debt collection operations for over 25 years our collection strategy for businesses or sole traders that have ceased trading is to move quickly to achieve a county court judgment (CCJ) using the service like Money Claims Online (see https://bit.ly/3gvX3mJ ). We recommend this as the easiest and most straightforward way to get yourself in the position of being the first creditor in the queue to recover what you are owed. For creditors who want to outsource the process of issuing a letter before claim, the claim and judgment, and then the enforcement of any judgment – don’t worry we offer a complete end-to-end service at fixed prices for a seamless collection process.

Of course insolvency measures such as a statutory demand and winding up petition/bankruptcy petition are available, but by adopting these strategies it is likely you will end up as being one of a number of creditors rather than the first in the queue, so they are usually not our first choice for a creditor who needs the cash collected. That said if these measures are the best option, they are all within our solutions hub so we can help you whatever you need.

Our simple strategy is to send a B2B 7-day letter before claim. If you are not paid a claim for the amount due, plus interest and costs can be issued, and if that doesn’t do the trick you can issue a default judgment just 19 days later. We can then arrange for the judgment to be transferred to the High Court for enforcement. The timeline is straightforward, and we charged fixed fees through our process, using our legal partner, Shergroup Legal.

Transferring to the High Court is all part of the service that Shergroup Enforcement provides. We use our own national panel of enforcement agents who will attend at the business address and find out what goods are inside. The effect of this visit is that it will either prompt the business who owes you money to pay up, or we can escalate our process to end up with a sale of the goods to pay the amount you are owed.

If you find yourself facing the problem of a “ceased trading” customer – we encourage you to call us now and let us help you review your situation and move quickly to get a satisfactory outcome. Don’t sit on your hands. Call TODAY on 0845 890 9200 or chat to us on our website at https://www.shergroup.com/

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