National Insolvency figures published (16 November 2021) by the Government’s Insolvency Service have indicated that the number of registered company insolvencies in October 2021 was 1,405:

• 63% higher than the number registered in the same month in the previous year (864 in October 2020), but
• 5% lower than the number registered two years previously (pre-pandemic; 1,480 in October 2019).
• The report also notes that in ‘October 2021 there were 1,248 Creditors’ Voluntary Liquidations (CVLs), which is slightly higher than pre-pandemic levels.’

(Statistics published in https://www.gov.uk/government/statistics/monthly-insolvency-statistics-october-2021)

Temporary Insolvency Restriction Protections put in place to support businesses during the pandemic started phasing out from 1st October 2021. New targeted measures to support small business and commercial tenants will come into force until March 2022 and will include:

1. Protect businesses from creditors insisting on repayment of relatively small debts by temporarily raising the current debt threshold for a winding up petition to £10,000 or more.
2. Require creditors to seek proposals for payment from a debtor business, giving them 21 days for a response before they can proceed with winding up action.

“The true picture of the impact of company and individual insolvencies to the construction industry is likely not to be fully understood until the 12 months ending 2021. With the threshold for issuing a petition being increased we advise our members to look at their options for collection and take advice from their collections service provider on the best course of action.”  Emma Miller, Company Director Top Service Ltd

Post Insolvency Debt Collection Service

We provide Insolvency Practitioners with a tailored end to end Post-Insolvency Debt Collection Service. We provide our service in collaboration with Silverback Commercial Law who offer competitive rates if legal action is required to recover monies owed. 

What we offer

• Free of Charge Ledger Consultation
• Collections Process with online access to live information on all cases
• Retention & Contract Collections
• Legal Action to Recover monies owed
• Dispute resolution

What makes us different?

• Our bespoke collection strategies mean that no case is treated the same. Our access to credit information and exclusive trading experiences enables us to change strategy quickly when our incoming intelligence is received, providing excellent results.
• Fast, effective collections. We know that speed is of the essence, so all collections are given top priority.  We don’t just go through the motions, our experienced and highly skilled team members are adept at tricky negotiations, dispute resolution, tracing absconded debtors and thinking outside of the box to achieve tangible results.
• Fully compliant.  We have been trading for 30 years and we have always taken compliance very seriously.  We are authorised by the FCA and Top Service Ltd is a corporate member of the Credit Services Association (CSA).  All senior Top Service staff are members of the Chartered Institute of Credit Management and collections professionals are hand-picked and trained to the highest standards. 
• We have 30 years of experience in collecting commercial and contract debts.

To discuss our Post Insolvency Collections Service with a member of our expert team please email insolvencycollections@top-service.co.uk.

Are you struggling to recover the money you are owed?

Contact our helpdesk team today on 01527 518800 to discuss how Top Service can support and help you protect your business.

With a personal guarantee in place, you may think you’ve got all bases covered should a customer begin to miss payments. However, construction industry creditors often find themselves in costly disputes with guarantors. Vague or badly drafted personal guarantees can leave you high and dry, with creditors questioning the legality or enforceability of a guarantee and ultimately, not paying what’s owed. 

What is a personal guarantee and when are they used? 

A personal guarantee is a promise bound in law. It’s a contract that says if the principal individual or company accessing credit (in the form of goods, money, or services) is unable to meet their financial obligations to the lender, then the guarantor will step up and do it on their behalf. 

Personal guarantees are used in all sorts of credit situations. When a bank loan or overdraft application is made, there’s sometimes a third party acting as guarantor to the borrowed money. This individual or business gives the lender more confidence; should the primary borrower find themselves unable to make repayments, the guarantor will step in. Landlords with tenants can use personal guarantees to insure their rental income. In some situations, a personal guarantee is the difference between a deal falling through and a deal taking place. 

What could go wrong? 

A well-written, carefully considered personal guarantee can push your business, and its financial success, forward. By giving you extra security to trade more freely, they can let you expand in new directions with minimal risk. However, this value is lost if the contract is flawed, and you’re left as vulnerable as if you’d had no personal guarantee in place at all. These are just some of the ways personal guarantees can lose their intrinsic value: 

• The agreement hasn’t had the benefit of being seen and signed off by a specialist solicitor. 
• The wording of the agreement is unclear. 
• The guarantor hasn’t been given the opportunity to seek legal advice or properly understand what they’re signing. 
• An original copy of the agreement hasn’t been received or the identity of the guarantor hasn’t been validated. 

How to avoid the pitfalls of personal guarantees 

Personal guarantees can be a very useful route to recover your money but the way they’re written needs to be absolutely watertight. There should be no grey areas, all key clauses should be included, and a specialist solicitor should lead the way. Without these a signed guarantee can be discharged by the courts, leaving you powerless and out of pocket. 

The most failsafe way to avoid a useless personal guarantee and protect your money is to use a specialist solicitor. We work with trusted partner Silverback Law specialists in both debt recovery and commercial litigation, making them the ideal choice for you to set out the terms of a strong personal guarantee. 

By enlisting the help of professionals, you can gain absolute peace-of-mind that should the worst happen and a debtor defaults, both your investments and your business itself are protected. Silverback Law can oversee every stage of the personal guarantee drafting, creating contracts that let you focus on day-to-day business, knowing that from a legal standpoint you’re covered and, if you need it, the debt recovery process will be simple. 

What makes Top Service Ltd different? 

As the only credit reference and debt recovery agency specific to the construction industry, we make it our mission to ensure our members receive the most up to date, credit information and company trading experiences which can make a real difference between company profit and painful write-offs. 

Are you struggling to recover the money you are owed?

Top Service members have access to an exclusive combination of no collection, no fee recovery services.

“We welcome the opportunity to talk to you about any bespoke changes you would like to make to our debt recovery procedures to fit the culture you have for maintaining customer relationships, whilst addressing the need to keep cash flow as fluid as possible for your business.Please contact our collections team to talk through any individual cases or to explore how else we can support you,” Emma Miller, Company Director Top service.

Contact our helpdesk team today on 01527 518800 to discuss how Top Service can support and help you protect your business.

National Insolvency figures published (15 October 2021) by the Government’s Insolvency Service have indicated that the number of registered company insolvencies in September 2021 was 1,446:

• 56% higher than the number registered in the same month in the previous year (928 in September 2020), but
• 4% lower than the number registered two years previously (pre-pandemic; 1,510 in September 2019).

*Statistics published in https://www.gov.uk/government/statistics/monthly-insolvency-statistics-september-2021

On the 9th September 2021 the government announced the Temporary Insolvency Restriction Protections are to be lifted and new targeted measures to support small business and commercial tenants will be introduced.  Restrictions in place started phasing out from 1st October 2021. 

New legislation will come into force until March 2022 and will include:

1. Protect businesses from creditors insisting on repayment of relatively small debts by temporarily raising the current debt threshold for a winding up petition to £10,000 or more.
2. Require creditors to seek proposals for payment from a debtor business, giving them 21 days for a response before they can proceed with winding up action.

“The true picture of the impact of company and individual insolvencies to the construction industry is likely not to be fully understood until the 12 months ending 2021. With the threshold for issuing a petition being increased we advise our members to look at their options for collection and take advice from their collections service provider on the best course of action.”  Emma Miller, Company Director Top Service Ltd

Post Insolvency Debt Collection Service

We provide Insolvency Practitioners with a tailored end to end Post-Insolvency Debt Collection Service. We provide our service in collaboration with Silverback Commercial Law who offer competitive rates if legal action is required to recover monies owed. 

What we offer

• Free of Charge Ledger Consultation
• Collections Process with online access to live information on all cases
• Retention & Contract Collections
• Legal Action to Recover monies owed
• Dispute resolution

What makes us different?

• Our bespoke collection strategies mean that no case is treated the same. Our access to credit information and exclusive trading experiences enables us to change strategy quickly when our incoming intelligence is received, providing excellent results.
• Fast, effective collections. We know that speed is of the essence, so all collections are given top priority.  We don’t just go through the motions, our experienced and highly skilled team members are adept at tricky negotiations, dispute resolution, tracing absconded debtors and thinking outside of the box to achieve tangible results.
• Fully compliant.  We have been trading for 30 years and we have always taken compliance very seriously.  We are authorised by the FCA and Top Service Ltd is a corporate member of the Credit Services Association (CSA).  All senior Top Service staff are members of the Chartered Institute of Credit Management and collections professionals are hand-picked and trained to the highest standards. 
• We have 30 years of experience in collecting commercial and contract debts.

To discuss our Post Insolvency Collections Service with a member of our expert team please email insolvencycollections@top-service.co.uk.

Are you struggling to recover the money you are owed?

Contact our helpdesk team today on 01527 518800 to discuss how Top Service can support and help you protect your business.

In our previous articles we have presented an overview of the most common type of insolvency that you are likely to face as an unsecured creditor, a Creditor’s Voluntary Liquidation. We have provided a high-level summary of the other processes that you may come across leading up to and including the initial meeting of creditors. We have also emphasised the importance of creditors participation in the process so they can have an influence on the insolvency. 

As with all insolvency processes it is crucial that as a creditor you participate in the process and where possible vote, but essentially ensure that you have submitted a claim. 

Within this article we provide an overview of retention of title (ROT), the benefits and the pitfalls and how it could help mitigate a supplier’s risk of being placed at the bottom of the payment hierarchy i.e. being an unsecured creditor. 

It is estimated that a quarter of UK businesses have experienced a client or customer entering insolvency. If you are waiting on payment for your goods, it can seriously impact your own ability to trade. 

Without a valid retention of title clause, it’s highly likely you will have to write off the majority or all of your debt.  Having a well drafted ROT clause could improve your position considerably.

If you have a valid ROT clause and your customer becomes insolvent, then the first thing you must do is find out whether or not they still have any of your products.  If so, then they may be recovered so that you can sell them to other customers. 

Retention of Title 

An ROT clause is a clause that is included in the terms and conditions of sale when goods are being sold. The clause protects the seller if the goods are not paid for. 

A straightforward ROT clause within a contract of sale essentially means that ownership of goods remains with the supplier until full payment for the goods has been received. There are a variety of ROT clauses which may be used depending on the circumstances. 

Simple’ Clause

This is a basic ROT clause that states title to specific goods that can be matched up to an outstanding invoice are retained by the supplier until payment has been received in full.

‘All monies’ clause

An ‘all monies’ clause allows for retention of title until all monies due from the debtor are paid to the supplier. This contrasts with the order-by-order basis of a simple ROT clause. An ‘all monies’ clause is often included separately, but also in addition to, the ‘simple’ retention of title clause within a contract. 

Proceeds of sale’ clause

This type of ROT clause addresses the problem of goods having already been sold on and may entitle the original supplier to the proceeds of sale. Unless the funds are held in a client account, these clauses are very difficult to enforce.

‘Mixed goods’ clause

If the goods supplied were used in the manufacturing process, and mixed with other goods, a ‘mixed goods’ clause may allow the supplier to claim right of ownership over the original raw materials. This type of clause can be problematic as it may not always be possible to separate the raw materials without causing damage to the third-party goods.

In order to enforce an ROT clause it needs to be clearly defined and signed by both parties. A supplier can then put their case to the appointed Liquidator to prove that title should remain with the supplier and enforce the clause accordingly.

A customer should be made aware of any ROT clause before, or when a contract is agreed, for it to be enforceable. It is also advisable to include these clauses within the terms and conditions of trade and not simply documented on the back on an invoice.  

Ensure that you have evidence of the customer agreeing to the clause, whether in email form, a signature, or a note.

ROT clauses work best when they are specific and limited in scope. Too broad and non-specific, and they will prove useless when it comes to putting the clause into action following your customer’s insolvency.

Are there any limitations to enforcing a Retention of title Clause?

• If the supplier is aware their goods will go on to be used in the purchaser’s normal course of business i.e. sold on before payment has been made, then any ROT clause may well be unenforceable.  

• Where a company has entered administration unless permitted by the Administrator or by Court Order, a supplier will not be able to enforce a ROT clause due to the moratorium that’s in place.

• Common sense dictates that any perishable goods are, by their very nature, going to make an ROT clause unenforceable.

• Ensure that your ROT clause doesn’t try and represent itself as charge over the customers assets. Charges over companies must be registered with Companies House within 21 days of their creation. If you fail to do so, then the charge becomes void.

What should I do next if I think I have a valid retention of title clause? 

On the appointment of either the Official Receiver or a commercial Insolvency Practitioner you should notify them with the existence of your claim. Until this notification, the company, under the Office holders’ control, may continue to use your goods without payment to you. 

Additionally, the insolvency practitioner has the right to sell or dispose of any goods they reasonably believe belong to the insolvent company.

The appointed office holder will likely send a retention of title questionnaire to you on appointment, but if they haven’t, then be sure to request one and complete it as soon a practically possible. The questionnaire will give the appointed office holder a better understanding of the situation and establish whether the ROT clause meets the necessary requirements to be enforceable, it’s very important that you send any relevant documents to support your claim.

• Details of the Retention of Title Clause – Evidence of express acceptance of your terms and conditions by the insolvent company

• Details of the Supplied Goods – A schedule of the goods supplied by you to the insolvent company.

• Identification of Goods – Details of how you intend to identify goods e.g., packaging, serial numbers, or other markings. 

• Specific Goods Belonging to You – You will; need to specify which goods on the buyer’s property that are covered by the retention of title clause.

• Prove, without doubt, that the customer has not paid for goods – Always keep accurate records.

Following notification, you should arrange try to attend the company premises in order to identify your goods so that they can be put to one side and not mixed with other assets.

It is essential that when drafting your ROT clause, you seek the appropriate legal guidance to ensure that they are legally enforceable and commercially effective. 

It is often the case that suppliers will draft their own ROT clause then rely on it indefinitely. With the ever-changing development in case law, it is important that you regularly review your ROT clauses, and their ongoing enforceability and effectiveness. 

If challenged on the validity of your ROT clause you should always obtain professional advice and guidance as retention of title is a complex area of the law, this can be further complicated by the various scenarios that could occur during an insolvency process.

If you are unable to meet the requirements to enforce your ROT clause, then you may find yourself back in the payment hierarchy as an unsecured creditor. 

This brings us back to the importance of always filing a proof of debt, no matter how small your debt may be. If you are unsure on how to file a claim or have concerns about the content of any of the documents you have received, the team at Restart BTi are always on hand to lend free support and advice.

If you do intend to manage the process yourself, ensure that once you have lodged your proof of debt you seek acknowledgement of receipt from the insolvency Practitioner. It is also important to understand that that there are no issues or requirements for further documentation to be sent to support your claim.

It may be the case further down line that you are asked for further supporting documentation when the Insolvency Practitioner intends to make a distribution to creditors. Again, ensure that you respond to this request within the relevant time frames in the notice and if you have any concerns again the team at Restart BTi will be able to assist. 

Another useful tip is where you encounter an insolvency you may want to hold onto any invoicing or statement data that may deleted or archived because of the bad debt.  We often see this dealing with claim further down the line and without this supporting information the Insolvency Practitioner may not agree your claim.

Don’t be afraid to ask for updates on the progress of the insolvency and ensure that you take note of progress reports to understand what progress has been made and what the likely dividend prospects are. Ultimately, the insolvency practitioner is working to try and get your money back, so you are fully entitled to receive such information.  Also, you are also able to question the level of fees even though the basis may have been approved previously.

An unsecured creditor or several unsecured creditors with at least 5% of the unsecured claims can request additional information regarding the costs of the procedure.

Any request must be made in writing within 21 days of receipt of the report and a response must be given within 14 days.  A creditor can then apply to Court within 21 days of receipt of the information or after expiry of 14 days from which the insolvency practitioner had to response.

An unsecured creditor or a number of unsecured creditors with at least 10% of the unsecured claims can make application to Court on the grounds that the costs are excessive.  Such an application should be made within 8 weeks of receipt of the report.

Whilst this is a useful tool it will involve a Court application so there will be additional costs.  It is therefore always better to deal with things such as costs at the outset of the procedure.

Creditor Services 

Dealing with insolvent debt can be difficult and, in some cases time-consuming. Having a business partner to support you through this process can make a huge difference to the success of your claim.

Our Creditor services team at Restart BTi can assist with the entire claims process no matter what type of insolvency you are dealing with. We will lodge your initial claim, deal with any queries, and make sure that important deadlines are met. We will oversee fee approvals on your behalf and call on our own licensed Insolvency Practitioner when we feel that an independent review or investigation may be required.

We can represent clients at meetings or on committees and will ensure that the difficult questions are asked to endeavour to get the best possible outcome for our clients. With our wide network of support, we can engage with other creditors and seek further support to guarantee that your voice is heard.

Our bespoke case management system, Divisi, ensures that we proactively monitor your insolvency portfolio, providing transparent reporting via our web-based portal.

This service is offered to our clients at no charge so if you want to remove the burden of managing your insolvency documentation and enhance your dividend prospects, then please contact Paul Hughes on 01246 959388 for further information.

What makes Top Service Ltd different? 

As the only credit reference and debt recovery agency specific to the construction industry, we make it our mission to ensure our members receive the most up to date, credit information and company trading experiences which can make a real difference between company profit and painful write-offs. 

Are you struggling to recover the money you are owed?

Top Service members have access to an exclusive combination of no collection, no fee recovery services.

“We welcome the opportunity to talk to you about any bespoke changes you would like to make to our debt recovery procedures to fit the culture you have for maintaining customer relationships, whilst addressing the need to keep cash flow as fluid as possible for your business.Please contact our collections team to talk through any individual cases or to explore how else we can support you,” Emma Miller, Company Director Top service.

Contact our helpdesk team today on 01527 518800 to discuss how Top Service can support and help you protect your business.

National Insolvency figures published (17 September 2021) by the Government’s Insolvency Service have indicated that the number of registered company insolvencies in August 2021 was 1,348:

• 71% higher than the number registered in the same month in the previous year (788 in August 2020), and
• similar to the number registered two years previously (pre-pandemic; 1,366 in August 2019).

(Statistics published in https://www.gov.uk/government/statistics/monthly-insolvency-statistics-august-2021/commentary-monthly-insolvency-statistics-august-2021)

Since the start of the first UK lockdown as a response to the coronavirus pandemic in March 2020, overall numbers of company and individual insolvencies have remained low when compared with pre-pandemic levels. As the Insolvency Service does not record whether an insolvency is directly related to the coronavirus pandemic, it is not possible to state the direct effect of the pandemic on insolvency volumes. Although, it is likely to be attributed to government measures put in place to help protect businesses from insolvency, under the Corporate Insolvency and Governance Act (2020) (Coronavirus) including the restriction of statutory demands and winding-up petitions which have previously been extended on several occasions up until 30^th September 2021. 

On the 9th September 2021 the government announced the Temporary Insolvency Restriction Protections are to be lifted and new targeted measures to support small business and commercial tenants will be introduced.  The current restrictions in place will now be phased out from the 1st October 2021. 

New legislation will come into force until March 2022 and will include:

1. Protect businesses from creditors insisting on repayment of relatively small debts by temporarily raising the current debt threshold for a winding up petition to £10,000 or more.
2. Require creditors to seek proposals for payment from a debtor business, giving them 21 days for a response before they can proceed with winding up action.

“The true picture of the impact of company and individual insolvencies to the construction industry is likely not to be fully understood until the 12 months ending 2021. With the threshold for issuing a petition being increased we advise our members to look at their options for collection and take advice from their collections service provider on the best course of action.”  Emma Miller, Company Director Top Service Ltd

Post Insolvency Debt Collection Service

We provide Insolvency Practitioners with a tailored end to end Post-Insolvency Debt Collection Service. We provide our service in collaboration with Silverback Commercial Law who offer competitive rates if legal action is required to recover monies owed. 

What we offer

• Free of Charge Ledger Consultation
• Collections Process with online access to live information on all cases
• Retention & Contract Collections
• Legal Action to Recover monies owed
• Dispute resolution

What makes us different?

• Our bespoke collection strategies mean that no case is treated the same. Our access to credit information and exclusive trading experiences enables us to change strategy quickly when our incoming intelligence is received, providing excellent results.
• Fast, effective collections. We know that speed is of the essence, so all collections are given top priority.  We don’t just go through the motions, our experienced and highly skilled team members are adept at tricky negotiations, dispute resolution, tracing absconded debtors and thinking outside of the box to achieve tangible results.
• Fully compliant.  We have been trading for 30 years and we have always taken compliance very seriously.  We are authorised by the FCA and Top Service Ltd is a corporate member of the Credit Services Association (CSA).  All senior Top Service staff are members of the Chartered Institute of Credit Management and collections professionals are hand-picked and trained to the highest standards. 
• We have 30 years of experience in collecting commercial and contract debts.

To discuss our Post Insolvency Collections Service with a member of our expert team please email insolvencycollections@top-service.co.uk.

Are you struggling to recover the money you are owed?

Contact our helpdesk team today on 01527 518800 to discuss how Top Service can support and help you protect your business.

The Ministry of Justice UK has published its response to the consultation on ‘Increasing selected court fees and help with fees income thresholds by inflation’.

The Government has analysed the responses to the consultation and considered the impact of policy proposals and recurring themes raised by some of the respondents. The consultation invited comments on the proposal to increase some court fees in line with historical inflation dating back to August 2016, or the date the fee was last amended if later, to the start of the 2021/22 financial year. 

The Statutory Instrument to effect these changes will shortly be laid before Parliament and the changes will come into effect on 30 September 2021. The new fee structure is outlined below (provided by trusted partner Silverback Law)

Emma Miller, Top Service Company Director says:

“With court fee’s increasing coupled with the announcement that temporary insolvency restrictions brought in by the Corporate Insolvency and Governance Act (Coronavirus) to protect businesses from creditor action will be phased out from 1^st October 2021 we are seeing more and more customers reviewing their current collection methods and looking for alternatives to court action. We advise members to look at their options for collection and take advice from their collections service provider on the best course of action and consider all options.” 

• The temporary measures were introduced in the Corporate Insolvency and Governance Act 2020
• The full Government response to the consultation can be viewed here

What makes Top Service Ltd different? 

As the only credit reference and debt recovery agency specific to the construction industry, we make it our mission to ensure our members receive the most up to date, credit information and company trading experiences which can make a real difference between company profit and painful write-offs. 

Are you struggling to recover the money you are owed?

Top Service members have access to an exclusive combination of no collection, no fee debt recovery services.

“We welcome the opportunity to talk to you about any bespoke changes you would like to make to our debt recovery procedures to fit the culture you have for maintaining customer relationships, whilst addressing the need to keep cash flow as fluid as possible for your business.Please contact our collections team to talk through any individual cases or to explore how else we can support you,” Emma Miller, Company Director Top service Ltd.

Contact our helpdesk team today on 01527 518800 to discuss how Top Service can support and help you protect your business.

The government has announced (9 September 2021) that the Temporary Insolvency Restriction Protections are being lifted^[1] and new targeted measures to support small business and commercial tenants will be introduced.  

To help protect businesses from insolvency a number of changes were introduced under the Corporate Insolvency and Governance Act (Coronavirus) to protect business from creditor action since June 2020, these restrictions will now be phased out from the 1^st October 2021. 

New legislation will come into force until March 2022 and will include:

1. Protect businesses from creditors insisting on repayment of relatively small debts by temporarily raising the current debt threshold for a winding up petition to £10,000 or more.
2. Require creditors to seek proposals for payment from a debtor business, giving them 21 days for a response before they can proceed with winding up action.

Emma Miller, Top Service Company Director says:

“With the threshold for issuing a petition being increased, we advise members to look at their options for collection, take advice from their collections service provider on the best course of action and consider all options.” 

The temporary measures were introduced in the Corporate Insolvency and Governance Act 2020

What makes Top Service Ltd different? 

As the only credit reference and debt recovery agency specific to the construction industry, we make it our mission to ensure our members receive the most up to date, credit information and company trading experiences which can make a real difference between company profit and painful write-offs. 

Are you struggling to recover the money you are owed?

Top Service members have access to an exclusive combination of no collection, no fee debt recovery services.

“We welcome the opportunity to talk to you about any bespoke changes you would like to make to our debt recovery procedures to fit the culture you have for maintaining customer relationships, whilst addressing the need to keep cash flow as fluid as possible for your business.Please contact our collections team to talk through any individual cases or to explore how else we can support you,” Emma Miller, Company Director Top service Ltd.

Contact our helpdesk team today on 01527 518800 to discuss how Top Service can support and help you protect your business.

^[1] https://www.gov.uk/government/news/end-of-temporary-insolvency-measures [gov.uk]

National Insolvency figures published (17 Aug 2021) by the Government’s Insolvency Service have indicated a 13% increase in business insolvencies in England and Wales compared to the number registered in the same month in the previous year (965 in July 2020), but 24% lower than the number registered two years previously (pre-pandemic; 1,442 in July 2019)^[1].

Since the start of the first UK lockdown as a response to the coronavirus pandemic in March 2020, overall numbers of company and individual insolvencies have remained low when compared with pre-pandemic levels. As the Insolvency Service does not record whether an insolvency is directly related to the coronavirus pandemic, it is not possible to state the direct effect of the pandemic on insolvency volumes.^[2] Although, it is likely to be attributed to government measures put in place to help protect businesses from insolvency, under the Corporate Insolvency and Governance Act (2020) (Coronavirus) including the restriction of statutory demands and winding-up petitions which have previously been extended on several occasions up until 30^th September 2021. ^[3]

The Corporate Insolvency and Governance Act 2020 introduced provisions to the Insolvency Act 1986 which came into force on 26 June 2020. A moratorium forms part of a package of significant legislative reforms intended to enhance the UK’s restructuring and rescue culture. The changes allow breathing space for businesses in financial distress giving them an opportunity to explore rescue and restructuring options, free from creditor action. The process was designed to encourage companies to act earlier to restructure debt and improve a company’s chances of success.

The moratorium is focused on the survival of the company rather than the realisation of its assets, with a view to try to save the life of a company as a going concern by effectively allowing a payment holiday from its pre-moratorium debts while it looks to restructure^[3].

According to the Government’s Insolvency Service main message for England and Wales (published 17 Aug) between the launch of the Breathing Space scheme on 4 May 2021, and 31 July 2021, there were 17,297 registrations, comprised of 17,098 Standard breathing space registrations and 199 Mental Health breathing space registrations^[4].

“The true picture of the impact of company and individual insolvencies to the construction industry is likely not to be fully understood until the 12 months ending 2021. We advise our members to consider alternatives in their debt collection procedures for example, in response to reduced operational running of the courts, taking the opportunity to not send overdue accounts straight from credit control to legal action but using a third party in between will help save on court costs and the frustrations involved of taking legal action.  We advise members to look at their options for collection, take advice from their collections service provider on the best course of action and consider all options, a one-step approach is not always the most effective.” 

Emma Miller, Company Director Top Service Ltd

Post Insolvency Debt Collection Service:

We provide Insolvency Practitioners with a tailored end to end Post-Insolvency Debt Collection Service. We provide our service in collaboration with Silverback Commercial Law who offer competitive rates if legal action is required to recover monies owed. 

What we offer:

• Free of Charge Ledger Consultation
• Collections Process with online access to live information on all cases
• Retention & Contract Collections
• Legal Action to Recover monies owed
• Dispute resolution

What makes us different?

• Our bespoke collection strategies mean that no case is treated the same. Our access to credit information and exclusive trading experiences enables us to change strategy quickly when our incoming intelligence is received, providing excellent results.
• Fast, effective collections. We know that speed is of the essence, so all collections are given top priority.  We don’t just go through the motions, our experienced and highly skilled team members are adept at tricky negotiations, dispute resolution, tracing absconded debtors and thinking outside of the box to achieve tangible results.
• Fully compliant.  We have been trading for 30 years and we have always taken compliance very seriously.  We are authorised by the FCA and Top Service Ltd is a corporate member of the Credit Services Association (CSA).  All senior Top Service staff are members of the Chartered Institute of Credit Management and collections professionals are hand-picked and trained to the highest standards. 
• We have 30 years experience in collecting commercial and contract debts.

To discuss our Post Insolvency Collections Service with a member of our expert team please email insolvencycollections@top-service.co.uk.

Are you struggling to recover the money you are owed?

Contact our helpdesk team today on 01527 518800 to discuss how Top Service Ltd can support and help you protect your business.

^[1] https://www.gov.uk/government/statistics/monthly-insolvency-statistics-july-2021/commentary-monthly-insolvency-statistics-july-2021

^[2] https://www.gov.uk/government/statistics/monthly-insolvency-statistics-july-2021/commentary-monthly-insolvency-statistics-july-2021

^[3] Top Service news: UK Corporate Insolvency and Governance Act: Moratorium

^[4] https://www.gov.uk/government/statistics/monthly-insolvency-statistics-july-2021/commentary-monthly-insolvency-statistics-july-2021

The Corporate Insolvency and Governance Act 2020 introduced provisions to the Insolvency Act 1986 which came into force on 26 June 2020. 

The moratorium is part of a package of significant legislative reforms intended to enhance the UK’s restructuring and rescue culture. The changes allow breathing space for businesses in financial distress giving them an opportunity to explore rescue and restructuring options, free from creditor action. The process was designed to encourage companies to act earlier to restructure debt and improve a company’s chances of success.

The moratorium is focused on the survival of the company rather than the realisation of its assets, with a view to try to save the life of a company as a going concern by effectively allowing a payment holiday from its pre-moratorium debts while it looks to restructure.

The Procedure

The moratorium process is designed to be quick and easy and involves the directors sending a notice to the Court, similar as in an Administration.  The notice requires the directors to make a declaration that the Company is, or is likely to become, unable to pay its debts.

The notice must be accompanied by a statement from a Monitor that they consent to act, and that the process is likely to achieve its goal, which is that the company can be saved as a going concern.

Once filed in Court the notice needs to be circulated to the creditors, employees, pension companies and the FCA, if it is a regulated Company.

The monitor must also ensure that a copy of that notice is filed at Companies House.

The Monitor Role

The Monitor must be a licensed insolvency practitioner, and their initial role is to ensure that the purpose of the Moratorium can be achieved.

The Monitor’s ongoing role is to ensure the conditions for the moratorium to be in place continue to be met and to protect creditors’ interests.

The directors remain in control of the company and will be responsible for the day to day running of the business. However, the Monitor is to have oversight of the Company and its finances.

The Monitor will have a say over what payments can be made, and to review whether sufficient income is being received to cover the costs of the Moratorium process.

The Monitor will also need to be actively involved in any restructuring of the business, to ensure that progress is being made and the purpose of the Moratorium is still achievable.

Eligibility 

Generally, companies are eligible to use the moratorium if:

• They are incorporated under the Companies Act 2006 or they are unregistered but may be wound up under the Insolvency Act 1986 (this category includes overseas companies)
• The directors state that the company is, or is likely to become, unable to pay its debts; and
• The Monitor is of the view that it is likely a moratorium would result in the rescue of the company as a going concern.

Companies who are not in or have not been in an insolvency process within the last twelve months, are eligible to apply.  You cannot have two moratoriums in the any one twelve-month period.

Where the company is subject to an outstanding winding-up petition, the court may make an order for a moratorium only if it is satisfied that a moratorium would achieve a better result for the company’s creditors as a whole than would be likely if the company were wound up.

Banks, insurance companies and other financial institutions are also not eligible. Accordingly, most companies will be eligible to apply for a moratorium, if they can satisfy the purpose, which is that the moratorium is likely to result in saving the Company.

The Division of the Moratorium Debts

The Act divides the company’s debts into three categories:

• Pre-moratorium debts for which the company has a payment holiday
• Pre-moratorium debts for which the company does not have a payment holiday
• Moratorium debts.

The company must continue to pay pre-moratorium debts without a payment holiday and moratorium debts during the moratorium.

Pre-moratorium debts without a payment holiday are those pre-moratorium debts which have fallen due before the moratorium, or which fall due during the moratorium and which are amounts payable in respect of:

• the Monitor’s remuneration and expenses. 
• goods and services supplied during the moratorium.
• wages or salary.
• redundancy payment.
• rent in respect of a period during the moratorium.
• debts or other liabilities arising under a contract or financial services including a loan; agreement.

The company is severely restricted to making any payments towards pre-moratorium debts for which it has a payment holiday.

The effect on legal proceedings/enforcement of rights

During a moratorium:

• A landlord may not exercise its right of forfeiture.
• There can be no enforcement of security (except financial collateral or a collateral security charge).
• There can be no repossession of goods under a hire purchase agreement or exercise of a retention of title clause.
• No legal proceedings or legal process may be raised, carried out or continued (except employment tribunal proceedings, legal processes arising out of such proceedings or proceedings involving a claim between an employer and a worker) in each case without the permission of the court.

During a moratorium creditors and shareholders are restricted from commencing an insolvency process (liquidation, administration, or administrative receivership).

Directors may still put the company into a formal process, and voluntary liquidation is possible if recommended by the directors.

Duration of the Moratorium

The Moratorium lasts 20 business days unless it is extended.

The Monitor has the power to extend the period once for a further 20 business days if they deem it appropriate.

The Moratorium can be extended further if either the Court or the creditors agree, if a CVA has been put forward and is currently pending.  However, the Moratorium cannot last longer than one year.

The Monitor must terminate the moratorium if they believe that:

• the moratorium is no longer likely to result in the rescue of the company as a going concern.
• the objective of rescuing the company as a going concern has been achieved.
• as a result of the failure of the directors to provide information regarding the company required and requested by the monitor, the monitor is unable to carry out the monitor’s functions.
• the company is unable to pay any moratorium debts or pre-moratorium debts for which the company does not have a payment holiday (which as discussed above includes any sums owed to its lenders).

In addition, a moratorium will come to an end:

• if the company enters another insolvency process (administration, including filing a notice of intention to appoint, CVA, liquidation)
• if a restructuring plan or scheme of arrangement is sanctioned
• if the court so orders.
• automatically upon the expiry of the moratorium term. 

In conclusion:

While the moratorium appears to be a very debtor-focused process it has been welcomed as a useful addition to the UK’s restructuring toolkit during these difficult times.

There remains uncertainty around some aspects of the moratorium that will need to be navigated and it will be interesting to see how these are dealt with in practice, hopefully with further clarification from the Courts or amendments to the act.

In respect of large, complex businesses we can see how the process will be very useful; however, to date, the procedure has been used very little.  Only four appointments were made in the six-month period to December 2020, with no appointments being made in the first quarter of 2021.

Whether that will change once the other support measures, most notably the ban on winding up petitions have been withdrawn fully remains to be seen.

Creditor Services 

Dealing with insolvent debt can be difficult and, in some cases time-consuming. Having a business partner to support you through this process can make a huge difference to the success of your claim.

Our Creditor services team at Restart BTi can assist with the entire claims process no matter what type of insolvency you are dealing with. We will lodge your initial claim, deal with any queries, and make sure that important deadlines are met. We will oversee fee approvals on your behalf and call on our own licensed Insolvency Practitioner when we feel that an independent review or investigation may be required.

We can represent clients at meetings or on committees and will ensure that the difficult questions are asked to endeavour to get the best possible outcome for our clients. With our wide network of support, we can engage with other creditors and seek further support to guarantee that your voice is heard.

Our bespoke case management system, Divisi, ensures that we proactively monitor your insolvency portfolio, providing transparent reporting via our web-based portal.

This service is offered to our clients at no charge so if you want to remove the burden of managing your insolvency documentation and enhance your dividend prospects, then please contact Paul Hughes on 01246 959388 for further information.

What makes Top Service Ltd different? 

As the only credit reference and debt recovery agency specific to the construction industry, we make it our mission to ensure our members receive the most up to date, credit information and company trading experiences which can make a real difference between company profit and painful write-offs. 

Are you struggling to recover the money you are owed?

Top Service members have access to an exclusive combination of no collection, no fee debt recoveryservices.

“We welcome the opportunity to talk to you about any bespoke changes you would like to make to our debt recovery procedures to fit the culture you have for maintaining customer relationships, whilst addressing the need to keep cash flow as fluid as possible for your business.Please contact our collections team to talk through any individual cases or to explore how else we can support you,” Emma Miller, Company Director Top service.

Contact our helpdesk team today on 01527 518800 to discuss how Top Service can support and help you protect your business.

When the first covid lockdown hit in March 2020 many construction businesses stopped trading and for a short time the focus shifted to collecting unpaid invoices and debt recovery. At the time, government support including the furlough scheme supported the collections process and helped businesses to maintain relationships with customers whilst collecting cash. 

Now the economy has fully opened and the financial support is needed to be repaid and / or coming to an end it is important that credit management stays on top of the priority list. We urge our members and the wider construction industry to focus on understanding their customers and suppliers to manage business relationships whilst keeping cash flowing and actively monitoring trading experiences in order to act upon early warning signs.  Above all, ensure your credit control team has the tools and support to be able to be proactive and use an industry specific service that can spot changes in payment patterns resulting in regular, more in-depth and up to date checks being carried out to pick up information quickly.

Emma Miller, Company Director of Top Service answers some of your frequently asked questions to help you improve your credit management processes:

“The construction industry relies heavily on supply chain and excellent customer relations, having to deal with overdue invoices, repeated late and non-payments can not only affect immediate cash flow but the opportunity for repeat business and client referral. In the event that an account moves into dispute, having the time and right approach to work towards a resolution without damaging customer relations or causing negative impact to your projects can be a never-ending cycle. By taking a consistent and robust approach to your business’s credit management process you will minimise your risk of late and non-paying customers.”

Information is key!

Information is key so they say, the more information you can acquire on a potential customer the greater your chances of securing payment on work carried out or supplied. Using a credit application form is the easiest way to ensure relevant and appropriate details of the potential customer are being taken. It doesn’t have to be long winded or lengthy, simply take the basic details you need to open a credit account and protect yourself:

Company Name AND Registration No

The entity of business if not Limited

Names of key people in the business

Contact numbers & email addresses

Using a credit application form is one thing but the key to protecting yourself is in the detail and checking the form and information provided for any anomalies is where you will be able to protect yourself the most.

Check?

• Use a credit reference agency to check you have been approached by a bona-fide company.
• Check the Directors of the Limited company and see if they have a lot of either active Directorships, resignations or insolvent companies.
• Use your credit reference agency to look at the trading history of the business, have other suppliers experienced non-payment or made enquiries about potential fraudulent applications.

Tip: Where you can, make a physical visit to the customer or potential customer if something doesn’t feel right to you. 

Research and Monitor Company Trading History

We urge our members and the wider construction industry to protect their businesses by  actively monitoring trading experiences and acting upon early warning signs.  Don’t wait for the information to come to you, use an industry specific service that can spot changes in payment patterns resulting in regular, more in-depth and up to date checks being carried out to pick up information quickly.

If you already have a trading history with the business, look at the orders that have previously been placed. Some companies will establish a good line of credit with suppliers, placing small, regular orders to give the appearance of a good customer. However, once an order pattern starts to change, ask questions to establish the reason for the change.

Act Early

It is important to react to new information regarding your debtor. For example, how many other people do they owe, is there a new CCJ, has the credit limit dropped? If so, why? This is all information you should be reacting to. For example, if a new CCJ is registered then you should skip a few steps in your credit control process and get it to a third party asap. Alternatively, pick up the phone and talk to your customer. It would not be unusual for you to be monitoring the customer so it should come as no surprise to them that you know about the new information.  

Do not ignore your gut feelings, noise on the ground or unusual trading patterns with the business. For example, why is the business asking for much more than usual and why are they not answering your call or following up on an email when they normally would? Has there been a sudden change in the way payment is received? 

Ideally for the best chance of collection a debt should be no longer than four weeks overdue before passing to a third party. At Top Service we would suggest no more than three letters are sent in-house. If they haven’t responded then they are most likely ignoring you and it will be prudent to refer swiftly into the next stage of your collection process. Act on information early and protect your business from the impact of bad debt. 

A one size fits all approach should be avoided

Look at your options for collection, take advice from your collections service provider on the best course of action for you and your customer. A one-step approach is not always the most effective. Above all, ensure your credit control team has the tools and support to be able to be proactive.

Know your rights

For commercial debts you can claim interest, compensation and costs of using third party collectors when applying the statutory legislation for late payment. Under the Late Payment of Commercial Debts (Interest) Act 1998 you can claim interest at a rate of 8% above base rate and a compensation figure, depending on the value of the debt you are collecting:

If your collection costs are more than the compensation figure you are claiming, you can claim the surplus under the late Payment of Commercial Debts regulations 2013.

If you are unsure about what interest and other charges you are entitled to contact us for FREE advice.

Summary:

1. Carry out robust and consistent financial processes.
2. Information is key. Use a credit application form to ensure relevant and appropriate details of the potential customer are being taken.
3. Monitor company trading history.
4. Act Early. It is important to react to new information regarding your debtor.
5. A one size fits all approach should be avoided. Look at your options for collection, take advice from your collections service provider on the best course of action for you.
6. Know your rights. When it comes to claiming interest, whether it is contractual interest or statutory interest, you are entitled to it.

Do you need help with your credit management process? If so, contact our helpdesk team today on 01527 518800 to discuss how Top Service can support and help you protect your business.