When faced with disputes, our clients turn to us for a bespoke service and strategic advice to guide them through the process and protect their interests.
Here, we provide a summary of a recent case we dealt with relating to Commercial Debt Recovery:
Recovering monies from a Limited company debtor
The client (Party A) had been engaged in a business relationship with a Limited company (Party B) for in excess of 12 years. During that time, the Directors of the two business entities had become friends, resulting in the formalities of business that one would ordinarily see, falling away to some extent. The business relationship generated a very large volume of sales for Party A, which would typically be in excess of £20 million per annum. As the relationship went on, Party B sought longer periods of time to pay for the goods Party A was supplying. Because of the high turnover of stock and the longevity of the relationship, Party A were willing to oblige. However, as time went on Party B’s level of debt to Party A began to increase considerably, with there regularly being a debt of approximately £2.5 million outstanding at any one time.
Whilst Party B made numerous promises to reduce the level of debt, the promised payments never materialised. Matters culminated with the breakdown of the relationship when Party B announced that they were no longer going to purchase goods from Party A, and instead would seek goods from Party A’s competitor.
At the time of the relationship break down, there were unpaid invoices totalling £3 million.
How Rooks Rider assisted:
We carried out a detailed review of the position between the parties and engaged in Pre-Action correspondence with Party B. However, Party B failed to engage in that correspondence and remained silent. In the absence of hearing from Party B and with there being no payment proposals to clear the £3 million debt, Party A commenced proceedings in the High Court of England and Wales to recover the outstanding sum.
Following the commencement of the proceedings Party B mounted a defence that monies were not in fact owed by Party B. Instead, if there were any monies owed, liability fell to the subsidiaries of Party B, one of which was already in administration.
Whilst the defence was extremely vague, it was necessary for us to fully investigate the contractual background with Party B to establish whether there was any merit to Party B’s assertions. Whilst Party B did have a number of subsidiaries, Party A was able to establish that the contracting party was Party B alone.
We submitted the evidence to Party B informing them that a Summary Judgment application would be made against them, where Party A would short-circuit the need for the matter to be determined at Trial. In the knowledge that a judgment against them would cause considerable financial harm to their business and, importantly, their ability to raise finance, Party B invited Party A to attend a mediation.
We represented Party A at the agreed mediation, during which Party B explained its precarious financial situation. If a Judgment were obtained against it, there was a material risk Party B would not be able to obtain the finance it required to carry on its business and, in turn, pay the debt to Party A. Party A took a commercial approach to the situation and reached terms of settlement with Party B at the mediation.
Party B agreed to make a lump sum payment, followed by 12 monthly instalments to pay the remaining balance, as well as paying Party A’s costs. Whilst Party B had sought to protract matters and create obstacles for Party A, all with the intention of looking to buy time for themselves to try and raise the monies needed to pay Party A and others, its efforts backfired and it ended up being far more expensive for Party B (having to pay their own legal costs as well as those of Party A’s), than had they taken a different approach.
For our client, the intended objective was achieved: they recovered the full amount sought and their costs.
How we can help you and your business
Rooks Rider’s main client base centres on national and international businesses and individuals with a particular emphasis on high net worth individuals. Each of our clients are unique and we treat them as such, providing pragmatic and balanced advice.
Not all disputes have to end up in Court and, using our extensive skills and experience, the Rooks Rider Dispute Resolution team will advise you of all options available to you, including Alternative Dispute Resolution.
If a resolution is not possible, our experienced team will guide you through the life cycle of the dispute process.
We are experts in a wide range of disputes which include:
- Contractual disputes
- Company, shareholder and partnership disputes
- Commercial debt recovery and enforcement actions
- Tax litigation
- Contentious trusts and estates litigation
- Construction disputes
- Insolvency claims and disputes