Holmes & Hills. Debt Recovery. Recover unpaid debts and improve your cashflow

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1 Debt Recovery Recover unpaid debts and improve your cashflow

2 2 debt recovery 3 About Solicitors Debt Recovery Solicitors is a large regional law firm with five offices across Essex & Suffolk and eight specialist legal departments. The firm offers expert legal advice and representation to businesses and local authorities across the region. is independently recognised as a leading regional law firm across several areas of law by the Legal 500 and Chambers & Partners two independent directories of the UK s top law firms. The firm is also recognised as one of the premier law firms in the country for advice pertaining to the specialist area of Planning Law. The firm s Litigation Team consists of five lawyers who advise and represent companies based across the South East and East Anglia, successfully concluding a wide range of disputes on behalf of our clients. The Team re-designed its fixed-fee debt recovery service several years ago to provide fee transparency to clients. The service is extremely successful and boasts a 94% recovery success rate, with 97% of successful recoveries being made at the first, most cost-effective stage. 94% recovery success rate *. 97% of successful recoveries are made at Stage 1, making it extremely cost-effective. Improve cash flow Reduce the amount of bad debt your business writes-off each year Discourage future late payment by taking a consistent approach to recovering debts Reduce the burden on your Accounts team or administrative staff by outsourcing No commission on amounts recovered Whether your business has a large volume of debts to recover, or encounters ad hoc debtors, provides a cost-effective recovery solution. Our debt recovery service has been designed to offer you a clear and transparent way of pursuing your undisputed debts. specialist debt recovery service separates the debt recovery process into three distinct stages of escalating seriousness. 97% of successful recoveries are made at Stage 1, making the service extremely cost-effective. There is a single fixedfee associated with having a lawyer implement each individual stage and there is no commission payable on the amount recovered. Our service enables you to decide, from the outset, exactly how much you wish to invest in recovering a bad debt and how far you are willing to take legal proceedings in each case, depending on the value of each debt. This gives you greater control and ensures you do not throw good money after bad. Sam Bawden Partner & Head of Litigation Team scb@holmes-hills.co.uk Commence Stage 1 > * Success rate based on the results of the 219 most recent debt recovery instructions received (and closed) as at 16th March 2017.

3 4 debt recovery 5 > Stage 1 Threatening legal action & demanding immediate payment. Solicitor s letter to your debtor threatening County Court or insolvency proceedings, with a chasing phone call from your lawyer to reinforce demands. recovers the vast majority of debts owed to clients at this very first stage (97% of successful recoveries to be precise), making the process both quick and cost-effective. Implementing this initial stage of proceedings can see your debt being recovered by us promptly and for a fixed-cost of as a little as 50 +VAT. If compensation is also recovered (see page 6 Seeking compensation from the debtor for details), then the real cost of our services is reduced. Your designated debt recovery lawyer will write to your debtor demanding immediate payment of the outstanding amount owed. This will threaten County Court or insolvency proceedings. If there is no response to the solicitor s letter from the debtor, and no payment is received within 7 days, the lawyer acting for you will call the debtor to reinforce the written communication and chase them for immediate payment. 97% of successful recoveries are made at Stage 1 This is because, unlike other debt recovery solicitors, we do not just send a threatening letter to your debtor. Stage 1 of our debt recovery service includes a chasing phone call made to the debtor by your designated debt recovery lawyer, reiterating the threats in the letter. Letters are easily ignored, but a phone call from a lawyer, in addition to a formal letter, is not. The legal fee you will pay to implement Stage 1 and commence the recovery of your debt depends on the value of the debt owed to you. This fee will always be fixed and there is no commission payable on the amount recovered. The fixed-fee bands are outlined in the table below. Debt owed Our fee Up to 1, VAT 1,001 10, VAT 10, VAT If we are not successful in recovering the debt at this stage, the fees shown in the table are the maximum amount you will pay.

4 6 debt recovery 7 Seeking compensation from your debtor. Under the Late Payment of Commercial Debts (Interest) Act 1998 you are entitled to recover compensation from the debtor, due to their late payment. If we are successful in recovering compensation, it will go towards covering the cost of instructing Holmes & Hills to recover the debt on your behalf. We will always seek to recover compensation from the debtor; however this can only be recovered where the debtor is a business. The amount you are entitled to recover is dependent on the amount owed and the number of outstanding debts. In the event that we are successful in recovering compensation in excess of the fees under this service (at any stage), the amount of compensation recovered will be the amount of your fees and no separate fee will be payable by you. If the compensation recovered only partially covers our fees, you will be required to pay the balance. Debt, fees & compensation examples Example A: You instruct to recover amounts due to you from two invoices, these total 900. Our fee is 50 + VAT ( 60) but in addition to recovering the amount owed to you, we are successful in recovering compensation of 80 ( 40 per invoice). This would cover your legal fee, leaving you with nothing to pay. The surplus compensation amount of 20 would be payable to. Example B: You instruct to recover the amount of 4,500 due to you from a single debtor. Our fee is 90 +VAT ( 108). In addition to recovering the amount owed to you, we are successful in recovering compensation of 70. This would go towards covering the cost of our services, leaving you with 38 to pay. We have been using Holmes & Hills Debt Recovery Service for just over a year, we feel confident that their legal expertise and guidance allows us to make good business decisions. Their professional and personal approach has enabled us to understand the complexities of the legal situations we encounter, and as a result we have reduced our aged debt considerably. Accounts Manager, Ernest Doe & Sons Ltd

5 debt recovery 8 9 Successfully recovered at Stage 1 With fixed-fee debt recovery service, Kempco Ltd recovered the full 2091 owed to them in eight days. Kempco Ltd, a regional print and stationery supplies company, approached Holmes & Hills when they had a client refusing to pay an invoice for services already provided by the company. Kempco were owed 2091, the debts were already between 1-3 months overdue. They had already made efforts to get the customer to pay the invoice, such as making polite phone calls, followed by more formal letters, but these had been unsuccessful. Kempco instructed to recover the debt on their behalf. began Stage 1 of the debt recovery process and wrote to the debtor, following this up with a phone call to chase the payment. This was enough to demonstrate to the debtor that Kempco were sincere about recovering the debt owed to the business and the full amount was paid by the debtor within eight days. May I express my gratitude to the staff of for their speedy and efficient debt recovery service... From day one we were informed of our best options and the charges to us were made clear as well. Paul Gardener, Director at Kempco Ltd Since this initial instruction, has assisted Kempco in recovering multiple outstanding debts arising from unpaid invoices. 97% of successful recoveries made at Stage 1

6 10 debt recovery 11 > Stage 2 Issuing a County Court claim or statutory demand against your debtor. If following Stage 1 your debt has neither been paid nor disputed by the debtor, will escalate the recovery of your debt and commence formal legal proceedings. Route A will issue a County Court claim against the debtor, who will receive papers from the court notifying them that this action has been taken. They will be required to respond to the court or settle the debt within 14 days. If the debtor fails to settle the debt and does not respond to the court within 14 days, will request that judgment be entered against them. A letter will be sent to the debtor informing them of the court judgment and demanding immediate payment of the debt, or face enforcement action. At this stage, in addition to potentially recovering compensation from the debtor, for their late payment (see page 5, Seeking compensation from the debtor ), we will also attempt to recover court fees and a fixed amount towards your legal costs. The amounts recoverable in addition to potential compensation are set out in the table below. Following the entry of a judgment, if the debtor neither settles nor disputes the debt, your lawyer will discuss the best course of enforcement action to take, dependent on the amount owed and the circumstances of the debtor. Please refer to Stage 3 overleaf. Route B: will issue a statutory demand to the debtor which will threaten formal insolvency proceedings if payment is not received. Proceedings in respect of a company would be an application to court for the company to be wound up, and in respect of an individual it would be to petition for their bankruptcy. This is only an option where a debt owed by a company exceeds 750, and a debt owed by an individual exceeds 5,000. The cost of issuing a statutory demand will depend on the amount you are owed and the bands are set out in the table below. The fee will always be fixed and there is no commission payable on the amount recovered. Should the debtor fail to settle the debt or respond to the statutory demand within 21 days, your lawyer will discuss with you the potential commencement of insolvency proceedings and provide an estimate of costs. Debt owed Our fee Court fee Recoverable from debtor (Court fee + fixed costs) Up to 1, VAT ,001 10, VAT , , VAT 4.5% of claim value Court fee , , VAT 5% of claim value Court fee Debt owed Our fee Between , VAT * 10, VAT * * Where the debtor is an individual (as opposed to a company) a third party will be instructed to serve the demand at a cost of 60-99

7 12 debt recovery 13 > Stage 3 Enforcing your claim. If the debtor has not settled the debt during Stages 1 or 2, then Holmes & Hills will seek to enforce your claim against the debtor in order to recover the monies owed to you. Enforcement action Our fee Court fee Application for order that the debtor attends court for questioning 75 + VAT Court fee of 55 + process server s fee ( approx.) Commonly, enforcement of the debt will entail instructing a High Court Enforcement Officer (Bailiff). The bailiff will seize goods owned by the debtor with a view to selling them if the debtor does not make payment. Another option is to apply for a charge against any property owned by the debtor. This would secure your interest, so that when the property is sold, you can seek payment of your debt from the proceeds of sale. Following a charge, you may then consider applying to court for an order that the property is sold. In addition to the above, there are several other enforcement methods. Your debt recovery lawyer will advise you on the most appropriate and cost-effective method to be used, based on the level of the debt outstanding and the circumstances of the debtor. If you need to find out more about the debtor s financial circumstances, you can apply to the court for an order that the debtor (whether an individual or company) attends for questioning. The debtor will be required to attend court and produce relevant documents to evidence assets and income. The table below sets out our fees and other fees associated with different enforcement action. Where your lawyer recommends an enforcement method that does not have a fixed legal fee, you will be provided with an estimate of costs at the outset. Application for Writ of Control - High Court Bailiff (where debt exceeds 600) Application for an Attachment of Earnings order Application for Third Party Debt Order Application for Charging Order on Debtors Property 75 + VAT If unsuccessful: 66 Court fee + bailiff s fee of 75 + VAT 75 + VAT Court fee of 110 If successful: 66 Court fee (Court & bailiff s fee recoverable from debtor) 75 + VAT Court fee of 110 Representation at court - estimated at 300 Charged on an hourly rate basis (an estimate will be provided based on the circumstances of the debt owed) Court fee of 110 Land Registry fee of 40 Representation at court - estimated at 300

8 14 debt recovery 15 Stronger contracts means fewer bad debts The stronger your contracts, the more protected your business is from bad debts and the easier it is to recover bad debts where they do arise. You should have in place contracts that have been specifically drafted for your business, which provide for the specific nature of your business, its procedures and practices, and its wider operations. With tailored contracts in place, drafted by a solicitor, the ability of debtors to dispute the terms of your contract (and the monies owed to you) will be greatly reduced. You will also be better positioned, from a legal perspective, should you need to recover debts through formal court procedures. If your contracts have been in place for two years or more, it is advised that you have these reviewed by your solicitor so as to make provision for any changes in the law or your business practices. Solicitors has a specialist Commercial Team able to advise you on the terms of your contracts, explaining what these can and should include so as to protect your interests, and drafting these for you to ensure they offer maximum legal protection. Call Sam Bawden on to discuss the drafting of contracts and protecting your business against bad debts.

9 94% recovery success rate. 97% of successful recoveries are made at Stage 1, making it extremely cost-effective. Offices in: Braintree Sudbury Halstead Coggeshall Tiptree Call