Debt Recovery Case Study July 2020
Published 27 July 2020
In a recent case, MKB Law was instructed by a building supplier based outside Northern Ireland, who was struggling to obtain payments on a debt due from a debtor. Despite many attempts made by the client dating back 6 months, their attempts for obtaining payments were being ignored. After examining the merits of the case, our Debt Recovery team advised that the best approach would be to issue a statutory demand.
A statutory demand is an effective and cost-efficient method for creditors to secure payment of debts. Once the statutory demand is served, the debtor is afforded up to 21 days to make payment. Failure to comply allows the creditor to issue either a bankruptcy petition or a winding up petition, depending on whether the debtor is an individual or a registered company.
In addition to the principal debt of £9722.11, we were able to utilise the statutory provision of the Late Payment of Commercial Debts (Interest) Act 1998 and Regulations 2002 as a means of financial redress for the client in obtaining statutory interest and late payment compensation, amounting to £214.42 interest and £70.00 in the late payment compensation.
The Late Payment of Commercial Debts (Interest) Act 1998 and Regulations 2002 provide a legal basis in business to business debts for creditors to claim up to £100.00 compensation per invoice, depending on the amount. It also allows the creditor to claim statutory interest at a rate of 8% above the Bank of England base rate.
In this case once the statutory demand was drafted, it was passed to the process server who carried out service. Within two days of service, our client was paid the full amount owed to them.
At MKB Law, particularly given the difficulties caused by the Covid-19 pandemic, we will examine each case on its individual merits and provide legal advice on a case by case basis. Please contact Ruairi Maguire, or any of our team within the Debt Recovery and Insolvency Department if you need any legal assistance.