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Page 9 of 9
Debt Recovery
8. Insolvency Procedures
Winding-up is the procedure whereby a company is forced to cease trading and its assets are sold in order to pay off creditors. The equivalent for an individual is bankruptcy.
8.1 These procedures can be used to enforce payment if the debt is more than £750, and is not in dispute.
8.2 Unless you have personal guarantees, or your customer's debts are secured against a property, you are an unsecured creditor. As such, you share money left after secured and preferential creditors have been paid.
- Secured creditors include banks and organisations owed loan repayments.
- Employees are the main preferential creditors.
- Should any money remain, unsecured creditors are paid in proportion to the amount of money owed to them.
- How much you receive will depend on how much money is realised by liquidation as well as the total number of claims and how much each is owed.
- If a customer has few assets, you may not receive anything at all.
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