We were approached by a Polish Law firm on behalf of their client who was owed in excess of $250k by a UK company but owned by an international individual. The debt related to services provided and on face value appeared to be undisputed.
After consulting with the client, we came up with a strategic plan. The debt was in breach of contractual payment terms.
We arranged for a statutory demand to be drafted and served against the debtor. This was successfully done. In the meantime, we had to oppose a company strike off due to the debtor not filing the appropriate documents with Companies House.
Having served the statutory demand, no response was received from the debtor and we therefore proceeded to issue a winding up petition after conducting due diligence on the debtor company to ensure that the client had good prospects of success for recovering their debt either by payment from the debtor or after the winding up of the company.
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Shortly after the winding up petition was filed and served against the debtor company; the director made contact with us indicating he intended to settle the debt before the final hearing.
Due to the value of the debt and the risk of the company being struck off or going into liquidation, we negotiated with the debtor to come up with an acceptable payment plan for both parties.
As the winding up petition had already been issued, we also had to finely balance and ensure that we complied with the legal requirements. As no formal offer had been accepted, the petition was advertised in accordance with insolvency rules.
At the winding up hearing the parties attended and the debtor for the first time disputed the debt which appeared to be a desperate attempt to have the petition dismissed. For those that do not know, you must not issue a winding up petition when a debt is disputed. As previously mentioned, at the point of issuing there was no dispute as the debt was in relation to a contractual breach of payment terms.
The hearing was adjourned to allow for the parties to file evidence.
After consulting with the client again it was agreed that we would continue with the case and oppose their dispute. A risky strategy because of the risk that the court may dismiss the petition with costs awarded against the claimant however we believed the ‘dispute’ could be overturned based on factual evidence.
In the coming weeks, heavy negotiations took place between us and the debtor and an agreement was reached in principal to pay the debt off in four instalments. Subject to the 1st payment being made, it was agreed that the petition would be withdrawn but with any breach of settlement terms, the client would be at liberty to issue a new winding up petition.
The settlement agreement was accepted and signed by the parties and the first payment was made. Thankfully, for all parties involved, the debtor kept up with the following payments and there was no need for our client to pursue the matter any further.
A great outcome for our client and the feedback below was grateful received:
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