Updated: 15th January 2021
When you can’t afford to pay the debts of your business, the situation can quickly escalate to the point where creditors bring in the bailiffs to recover their money. It’s a worrying position to be in, as bailiffs are typically brought in under a court order and there can be serious consequences if you don’t pay.
It’s important to know, however, that ways out of this stressful situation exist even if the business enters insolvency. Before we look at how you can protect yourself and your business from legal action, what happens in practical terms when bailiffs are appointed and you can’t afford to pay?
Bailiffs will visit your business premises to take control of goods to the value of the debt, plus interest and their fees. Authorisation is likely to be via a Writ of Control or Warrant of Execution, and you should be given seven days’ notice of the visit. If the creditor is HMRC, a court order isn’t required.
Bailiffs are only allowed to attend your business premises between the hours of 6am and 9pm. The bailiff could have the right to force entry to your home or business if they’re collecting tax debts for HMRC such as VAT. They will need to show proof of who they are and why there are here; check that their documents are signed and in date and have your correct name and address.
They aren't allowed to break down your door - they have to use 'reasonable force'. This means they'll have to come back with a locksmith who will unlock the door. If you’re a limited company director, bailiffs can only seize goods belonging to the company rather than you personally.
If you’ve received an enforcement notice from the bailiffs, you should seek professional insolvency assistance as soon as possible. Knowing your rights in this situation is crucial, as some bailiffs might claim to hold more power than they do in reality in order to pressurise you into paying.
Licensed insolvency practitioners typically have extensive experience of dealing with bailiff enforcement, and provide invaluable support to businesses and their owners at an extremely stressful time.
So what options might be open to you?
Various forms of alternative funding exist for businesses unable to secure bank lending, or that don’t have the time to engage in onerous application processes. Alternative finance products offer flexibility and agility to businesses in need of regular cash injections, or a cash lump sum, and can provide the working capital needed to function more effectively.
By entering company administration you put a temporary stop to any ongoing or pending legal action by creditors, and can formulate a plan for recovery or sale. Selling the underlying business assets via pre pack administration may be an option, and this involves the transfer of staff under TUPE regulations that protect their employment rights.
If the financial position of your business is so poor that it cannot continue, Creditors’ Voluntary Liquidation enables you to close it down in an orderly manner as opposed to creditors forcing you into compulsory liquidation. CVL allows you to fulfil your obligations as a director, and if you meet the criteria you may also be able to claim director redundancy.
If you would like more information on bailiff action when you can’t afford to pay, please contact one of our licensed insolvency practitioners at Real Business Rescue. We focus on business rescue and recovery, and hold substantial experience of helping businesses out of debt. Operating from an extensive network of offices around the country, we’re also able to offer free same-day consultations to quickly establish your needs.
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