Small claims for money owed from business shutting down?

6 replies
Found 29th May 2009
Hey guys

Got a bit of a pickle situation where I am currently owed a large sum of money by a registered business. Would like some advice from those a bit more legally saavy on the best thing I could do right now.

A place I was renting a room from for work is shutting down unexpectedly. I found out 2 days ago, and we had to frantically cancel a large number of bookings. Thankfully the place is still there, but no one is there anymore. And the only way to contact them right now is via email. My clients normally pay through their merchant account, then they bank transfer me the money after subtracting costs of 'fees'.

The company is LTD registered. I have the 2 owner's residential details from Company House. They have not yet filed for liquidation. I don't have contact numbers. I did get an email 2 weeks ago asking for my bank details again saying they have misplaced it, and they would send that day. But since then, nothing.

Before I send the heavies over, I wonder if there's anything else I can/should do to maximize my claim for this money back. It is under £5k, but a hefty amount. Unfortunately I have minimal 'evidence' of payment, but my clients could probably serve as witness if it comes to it (plus their bank records would probably show payment from these people).

Matters got worse because one client now wants a refund for a rather large sum and he paid in cash that I never received. But to avoid my rep being damaged, I am having to pay out of own pocket. So it's been a bit of a nightmare.

I've evaluated the best options, and so far they include:

1. Wait - I've sent 2 emails and an invoice this week. Maybe they are just busy, and I should just be more patient.

2. Small claims - but probably not worth the hassle right now. If it comes to it though it's an avenue I will be explore.

3. Send the heavies!

4. offer all paid clients 50% discount in cash, and ask them to file chargebacks! A bit of a d*** move, and unsure where that would stand legally, but if push comes to shove, surely they should pay. I heard section 75 for CCs cover liquidation, but but some paid with debit card so not sure about those.

I could really do with any help/suggestions on how I should proceed.

Thanks

  1. Misc
  2. Business
6 Comments

Welcome to the recession.

Good Luck...

You will need it as will the others who the company probably owes money to.

I think the way forward is to speak to their creditors when they are properly registered with them.

One thing I find odd is that you claim to have 'minimal evidence of payment' - you've not been avoiding the taxman have you sir?

This is a complicated one by the looks of it.
So you are a sole trader?
So the contactual relationship here is:
Sole trader Ltd co acting as an agent? or as payment processors only? Landlord? customers?
Do you have a written agreement for the payment processing? or is this an informal agreement?
What kind of co is it? (should be on co house if unsure). Is their business letting commercial properties? Payment processing? Commercial agency?
Do you have proof of prior payments etc to show a course of dealings should you need to?

s75 does allow for recovery if paid using a credit card, but it sounds like your customers may have paid simply for a payment processing service? In which case it is akin to paypal chargebacks - completely at the goodwill of credit card co.

Original Poster

moob;5351809

I think the way forward is to speak to their creditors when they are … I think the way forward is to speak to their creditors when they are properly registered with them. One thing I find odd is that you claim to have 'minimal evidence of payment' - you've not been avoiding the taxman have you sir?



How do I find who their creditors are? Re: 'evidence' I am not referring to taxes (which I pay in full, my accountant sorts out for me). I keep track of all payments / invoices, but from their end this was all from one day of payments from a few clients about 2 weeks ago. I never received any receipts as evidence, as everything has been going smooth so far and I was being stupid.

Clients paid via their merchant card processor, and they did mark down the total amount to send over, I also sent an invoice. I do have an email from one of the owners 2 weeks ago asking for my bank details because they claim to have 'misplaced' and that payment would be sent that day. But I never received it.

seancampbell;5351978

This is a complicated one by the looks of it.So you are a sole trader?So … This is a complicated one by the looks of it.So you are a sole trader?So the contactual relationship here is:Sole trader Ltd co acting as an agent? or as payment processors only? Landlord? customers?Do you have a written agreement for the payment processing? or is this an informal agreement?What kind of co is it? (should be on co house if unsure). Is their business letting commercial properties? Payment processing? Commercial agency?Do you have proof of prior payments etc to show a course of dealings should you need to?s75 does allow for recovery if paid using a credit card, but it sounds like your customers may have paid simply for a payment processing service? In which case it is akin to paypal chargebacks - completely at the goodwill of credit card co.



Yes I am self employed / sole trader. I am not even acting or hired by them. The arrangement has been simply that I rent a room at the premises. But customers usually pay through them first, and often by card hence via payment processing. Unfortunately this has been an informal agreement.

This is an Private Limited Company. They are still 'active' on co house. Nature of business is 5211 (retail in non specialised stores holding alcohol license) but they are technically a 'therapy centre' renting rooms to various sole traders. Mortgage appears 'outstanding', whatever that means, and probably unrelated. I also have the registered office which looks like an accountancy firm, but not sure if I can do anything with it.

I am thinking to proceed via small claims (and have been put in touch with a lawyer of some kind who handles cases like this), or just start the chargeback proceedings if I don't hear back by Monday... would this be the best thing to do based on current scenario (besides just giving up and chalking it down as a lesson learned?) The other option is just to visit them at the house and knock on the door...

*you* would be the creditor (along with everyone else owed money), I assume what the person meant is to speak to the liquidator. When you say they are shutting down unexpectedly are they definitely going into administration/liquidation shortly? If so then I can't see you getting anywhere with small claims or legal proceedings.

If they do go into liquidation my understanding of the procedure is as follows (having worked for companies where this has happened), another company will be called in as liquidators at which point the original company stops trading/dealing. The job of the liquidators is then to compile the list of creditors (anyone owed money by the company), work out what money the company had and what assets can be sold. The liquidators will then sell on as much as possible to raise money and put it together with any saved money then start paying off the creditors, from memory they pay themselves first, then employees, then anyone else.

In practice for me this meant I was on the list of creditors along with all the other employees, the company who were due money for cleaning the office, Vodafone for overdue line rental etc. Even after selling off all the assets (which they did for pennies) and adding the money that had been saved by the company there was not much and the liquidators took a chunk out of that for their own fees. The end result was that I didn't get a penny and nor did any of the other creditors regardless of whether they were employees or companies.

John

If I were you I would go ask the lawyer you have details of for a free half hour session (most lawyers do this, they just don't advertise it!). John's scenario above is unfortunately common place, and an informal unevidenced unsecured agreement is likely to be pretty low on the creditors list assuming the business has shut down as in going bankrupt rather than simply being closed as not profitable enough for the owner.
Post a comment
Avatar
@
    Text
    Top Discussions
    1. Meerkat Movies (2 for 1 Cinema Codes) | Official Trading Thread428314659
    2. Without giving away your age, name three things that remind you of when you…55118
    3. word association Game74244933
    4. Just heard this...2 ★★★★★★★★★★★★★★ congrats to all on 392k ★★★★★★★★★★★★★★7769603

    See more discussions