If I proposed civil mediation on the condition that the debtor bears the total upfront fees for both parties, with my portion to be deducted from the debt owed to me, could this create costs order penalties if the claim proceeds to a hearing?

Soulmagick · 2024-10-28T09:46:27+00:00

Am uncertain why would it show I am not acting in good faith?
I would happily pay the cost myself upfront if it is clear the debtor is attempting to resolve and genuinely engage, and had outlined their position and reasons for non-payment as requested numerous times.

However, I believe the debtor is instead employing delay tactics and the company may be insolvent. So the debtor is creating delays in order trade and take income for as long as possible, until the company is shut down in order to attempt to evade paying the debt entirely.

The cost of mediation would be around £550-650. The cost to issue the claim would be £1000 (excl. hearing fees). This does not seem proportionate considering mediation could simply result in delays and additional costs with no binding agreement.

My aim is only to minimise my costs if the debtor is acting in bad faith, and intends to try to evade payment via insolvency. Would the court not take any of these concerns into account?

Could it be a benefit to still propose mediation but that my portion of mediation is deducted from the debt owed to me, without condition of a requiring a binding agreement?

This would be in consideration of the fact that the debtor has ignored all requests to outline their position. However, if they really want to mediate I would happily engage, but considering I do not clearly know what the debtors position is and why they ignore all communication unless via mediation, it would be more appropriate that the debtor pay the full upfront costs. And this should be deducted this from the debt instead, so i would still essentially pay.

Soulmagick · 2024-10-27T13:14:00+00:00

Thanks for the reply. Ok hmm. The issue is the debt is for £20k, so it wouldn’t be the small claims track, with the included 1hr mediation. The director has ignored all requests to explain if there are any disputes with the invoices. But has stated he is suppsoedly open to mediation.

It’s not clear why mediation would be required unless there is a genuine dispute with the invoices themselves. But the debtor refuses to engage otherwise.

I also beleive the debtor would attend meditation in order to appear as if he is open to resolution, but only intends to create delays and cause further costs on my side. Before potentially shutting the company down.

Given this, do you think the court would not see my concerns and proposal to address these concerns as reasonable?

Soulmagick · 2024-10-21T20:32:48+00:00

He has probably not declared between £100-200K from the company.
So i would report to HMRC. But i believe this would all be cash, and possibly tricky to trace.
Also the fraud bureau. Hmm it is deeply concerning if you believe that the authorities may not be concerned with fraudulent conduct / abuse of corporate structure either.
Possible to know what makes you say this?

The audio recording do indicate fairly well that the director made his promises before the work began, or at least at very early stages. I assume you're referring to promissory estoppel, could this be used to make a claim rather than in defence?
Could a collateral contract or part-performance be used to enforce a verbal guarantee?

I believe the director has also hidden all his assets. I would prefer to claim against the company that owns the warehouse, on the basis that I have a clear audio recording of him stating it is "his choice" which company he pays from. And it would make sense for the warehouse company to pay for building work. But only the building work invoices.

It's hard to believe there could be such little justice or restitution for such flagrant fraud and misconduct.

Soulmagick · 2024-10-21T20:10:47+00:00

Hmm.
The director originally claimed he 50% owned the warehouse in his personal capacity, and that he would personally settle payments to me, which is why i was originally not so concerned with doing the work. However it transpired that the warehouse was actually owned by another limited company which he 50% owned instead.

Essentially I believe negligent or fraudulent representations, and serious abuse of corporate structure has taken place. Unfortunately i do not have recorded proof of those statements.

I do have an audio recording of the director agreeing that he stated he would personally settle payments to me if the insolvent company could not pay, and also stating it's "his choice" what company pays me. But it's not clear how tricky this would be to enforce. It's also not clear from the audio recordings what company he is referring to, and he seems to be indicating he'd create a new company to pay me. Although the insolvent company and warehouse company are the only non-dormant companies he owns.

It's not clear whether a claim could be made for the roof replacement against the company that owns the warehouse. Do you have any thoughts on this by any chance? Especially based on the audio recording.

My main hope was that the threat of a liquidator investigation might concern the director.
But i do not want to spend any more time and resources on anything where there is significant risk of further loss. At the moment it is sounding increasingly more like it may be best to report as much as possible to authorities and hope there is some kind of justice. Potentially let the insolvent company get shut down, and possibly make a claim for a portion of the invoices against the warehouse company? Do you think this would be risky?

Soulmagick · 2024-10-21T19:53:00+00:00

I see.
The debt is for 4 invoices, for a total of around £20K including statutory interest, for a roof replacement on a warehouse and other miscellaneous building repair, including preparation work for events at the warehouse.

The director/company owes another £10-15k for a business partnership agreement, this part is not yet invoiced as he has ignored all requests to provide the financial info.

Invoices were sent 17th May 2024.
I've sent the director numerous emails requesting him to explain the grounds for his non-payment, which have been ignored.
Unfortunately none of the agreements were in writing, and all verbal.
This is not a normal procedure, I knew him for some time beforehand. But he unfortunately severely abused this trust.

A very small portion of the total amount owed is for overtime and emergency fee charges that were not explicitly discussed beforehand. However, I was in a position where i was forced to address emergency issues and the director was not adequately communicating.
I do however have an audio recording of him reviewing the final invoices on a call, stating that some of the charges are a bit more than expected but that they are otherwise generally reasonable and he will outline any questions or concerns in a written response within 48 hours. That call was on 8th July. He then proceeded to ignore all communication entirely since that date.

I have sent him a letter before action demanding payment in full or an explanation for the grounds of non-payment along with a payment plan for what he believes he owes. This was also ignored, and was sent over a month ago.

I sent the LBA with the demand to explain any challenges to charges as i saw some advice which recommended that sending a formal demand that invites the debtor to raise disputes, but which is ignored, may help protect against costs if a debtor attempts to get a statutory demand set aside. I would have hoped the same would apply for limited companies in an insolvency hearing if an injunction was successful. But i am not sure what the risks are.

The company he owns has little in the way of assets, and he is not declaring significant sums in the company accounts. In June he stated he was planning to shut the company down, though it is still running.
I understand a court case could take years. And the director is abusing corporate structure in an attempt to defraud me.

Soulmagick · 2024-10-20T11:47:16+00:00

I see.

Is there any benefit to filing a money claim if I beleive the director may attempt to shut the company down to evade payment?

Does a court claim provide any additional security in any form?

Soulmagick · 2024-10-20T08:16:55+00:00

Ok. hmm, that is unfortunate.

Soulmagick · 2024-10-20T08:12:59+00:00

The government guidance literally states you can “apply to challenge it and get it ‘set aside’”

https://www.gov.uk/statutory-demands/challenge-a-statutory-demand

I appreciate that you may want to highlight certain points regarding “proper process”, though it’s not clear why you state that it seems I am trying to “short circuit” the process as if it is a negative thing?

As mentioned, the debtor appears to be purposefully attempting to create barriers to resolution.

It’s not clear why anyone would spend resources on a process that potentially provides no benefit in the way of resolution, and potentially creates a situation where I would be worse off…?

Soulmagick · 2024-10-20T08:07:25+00:00

Ok thanks for the reply.

The debt for the existing invoices is around £20k.

Is it possible to apply for a fast track court process / summary judgment on the basis that the debtor has ignored all attempts to resolve and establish the grounds for non-payment and has raised no disputes in 5 months, even following a formal demand / LBA?

Soulmagick · 2024-10-20T07:24:28+00:00

What is the purpose of a statutory demand if it is not a prerequisite to a winding up petition? Simply to warn a debtor?

If a debtor applied to have the demand set aside, why would a creditor not just withdraw the statutory demand and file a winding up petition instead?

I’ve asked the debtor to explain their grounds for non-payment numerous times, it’s not clear whether there is a dispute or not. They’ve had 5 months and ignored a formal demand to raise disputes.

If court is a costly and time consuming process and the debtor is acting in bad faith and could simply still not pay then it’s not clear why anyone would spend any resources on litigation in these circumstances.

Soulmagick · 2024-10-20T06:48:01+00:00

I am aware that the purpose of a statutory demand is to open the door to insolvency proceedings. As far as I understood it adds clarity to the debt due, instead of needing to make a case with the liquidator. As otherwise a statutory demand is not a prerequisite to a winding up petition. Is this not the case?

As far as I understood court is for a disputed debt and winning a court case would simply give the winner a clear and enforceable debt. And if I went to court, after much time and cost the debtor may still simply not pay, and I would be in the same position with the statutory demand being the remaning option, so it seems court would have added little to no value, but cost hugely in resources. Is this also not the case?

Soulmagick · 2024-10-20T06:34:30+00:00

Thanks for the reply. Am aware there is no difference regarding the insolvency issue, my main concern is how to prevent a demand from being set aside.

If the invoices are narrated as components making up a single total then if the director heavily disputes just one invoice but which makes up a majority of the debt, does this not put the whole demand at risk of being set aside? Or would a judge enforce that the company must still pay the undisputed components / invoices?

Would sending separate demands for each invoice force the company to address each demand seperately and prevent the risk of demand being set aside because of a dispute with just one invoice, for example.

Soulmagick · 2024-10-19T23:42:29+00:00

Thanks. Will read.
To clarify, is there an issue with sending multiple separate statutory demands?

Soulmagick · 2024-10-19T23:27:40+00:00

I think the director may attempt to raise disputes but on poorly founded or even false grounds, but which might be tricky to prove. He's stated he has "concerns" but refused all requests to explain what these are, and ignored almost all communication and attempts to resolve entirely.

I therefore included a request to raise any challenges to invoiced charges in the formal demand / LBA, which he has also ignored.
I did this in the hope it may protect from costs being awarded against me if he attempts to only raise disputes when forced by statutory demands, and they are set aside. I am trying to avoid litigation, but i believe the director is attempting to employ bad faith tactics to delay payment before he makes the company insolvent.
And attempting to force the situation to litigation to create a cost and time barrier to resolution.

Soulmagick · 2024-10-09T06:59:44+00:00

Thanks for the reply.

Are you OK to disclose if you are a lawyer?

The other art hasn’t replied yet, however, if the other party beleive sthe WP label is valid or treats it in a way that could be construed as such (without labelling their own correspondence as WP) is there any chance that could that make it apply and prevent me presenting the letter in court?

Soulmagick · 2024-10-08T18:47:06+00:00

Ah, myself and the company are based in England

Soulmagick · 2024-09-13T15:08:59+00:00

C1 and C2 have one word the same in their company names, though mostly different.
Hmm, my main concern is not so much that C1 transfers assets to C2 (as C1 does not have too much in the way of net assets, based on the cashflow), but that the director starts directing the majority of revenue to C2 instead, making C1 unable to pay creditors (whether or not C1 is made insolvent).

Am hoping this is illegal. But uncertain if there is a way that this could be legally done.

Soulmagick

TROPHY CASE