Facing debt and cash flow problems is challenging for any business. However, where a debtor, supplier or client becomes insolvent, this could cause you great financial difficulty. In this post, we provide an overview of the signs that indicate a business may be approaching insolvency and set out the steps you can take to mitigate your losses.
UK debt charity, Step Change, has called on the next Government to commit to measures that will help people and businesses deal with debt. The measures proposed by Step Change include assigning an independent regulator for bailiffs and enforcement agents and creating legally binding practice standards for debt collection and enforcement.
Head of Policy, Research and Public Affairs at Step Change, Peter Tutton, said:
“It would be a tragedy for people in problem debt if the positive work in progress … got lost somewhere between this government and the next. So, we urge in the strongest possible terms that all the work in progress is carried over by the next government.”
A Russian utility company has come up with a novel way to ensure it gets paid on time. Essentially, they dump a pyramid, weighing no less than three tonnes, on your front lawn with a variety of messages.
The case of Sell Your Car With Us Ltd v Sareen, decided in the English High Court in 2019, is a timely reminder that insolvency proceedings can be used as a form of debt collection, even although some judges frown upon the practice.
Charles Dickens is a British institution. His serial writings had a significant impact on the social consciences of the day, often highlighting the poverty and other hardships which existed in the early part of the 19th century. This may be hardly surprising as his books often drew from his own personal experiences. Born in 1812, his father, John Dickens, was a clerk in the Royal Navy. Aged only 12, the young Charles was sent out to work at a boot-blacking factory after his father had been imprisoned in Marshalsea debtors’ prison as a result of a £40.00 debt which he had failed to repay. This real life experience was fictionalised in the book, “Little Dorrit”.
According to the latest analysis from KPMG, the number of companies in Scotland declaring insolvency has risen by 46% in six months. Experts at KPMG have attributed the dramatic rise to instability in the current economy, particularly pointing to Brexit as a leading factor.
Head of restructuring, at KPMG, Blair Nimmo said:
"The ongoing Brexit discussions and change of Prime Minister and Cabinet have undoubtedly created a climate of uncertainty, but there are wider challenges at play, creating a toxic mix of issues for businesses going through a period of distress."
The analysis highlighted that there had been 698 corporate insolvency appointments in the period running from January 2019- June 2019. In the preceding six-month period, there were 479 corporate insolvency appointments.
Many business owners are unaware of the different limitation periods for reclaiming debts in Scotland and England. Failure to observe these strict time limits could make all the difference to the success of your business or have severe repercussions for cash flow and even solvency. Many business owners believe that the limitation periods for debt is the same in the two jurisdictions, but in Scotland, the limitation is five years, whereas in England it is six years. Business owners and teams managing the debts and cash flow of the business need to be aware of these time limits and the laws which govern their contracts with clients.
Financial help website, Scottishtrustdeed.co.uk recently created a report on the state of insolvency in Scotland, based on figures from 2018. In this post, we look at some of the key findings from the report, which may help you to identify liabilities in your business and in your personal circumstances.
The latest report from the Accountant in Bankruptcy (AiB) outlines that 4,664 people were declared bankrupt in 2017/2018, representing a 1.8% increase year on year. In addition, 73% of bankruptcy applications were made by individuals as opposed to creditors. Glasgow and Edinburgh had the highest numbers of bankruptcies, but this is to be expected given their higher populations, and doesn't give an accurate reflection of where the highest risk for bankruptcies lie. It is, in fact, more rural or 'fringe' areas such as Dundee where the biggest risk is concentrated.
You couldn’t successfully argue that Nicholas Wilson wasn’t persistent. That’s because he spent 16 years on a crusade to establish that HFC Bank and John Lewis Financial Services had overcharged thousands of people on debt payments. Both lenders are now part of HSBC.
English local authorities have been criticised for their overzealous debt recovery practices. In an article in July’s edition of “Local Gov”, the extent of the problem was highlighted, with council tax arrears accounting for no less than a third of debt issues which Citizens Advice deals with. This is a staggering figure, particularly when one considers that it exceeds credit card debt problems by 8%.
Legal changes can have a dramatic impact on you and your business. To ensure you are kept up to date with the latest developments and have the knowledge to make timely, effective decisions, please sign up for our free updates.