Negotiations with Creditors


Creditors fall into key categories. Varying approaches are required and knowledge of the sectors is crucial.
 

Trade

The use of retention of title clauses and refusal to continue to supply are key factors that often place trade creditors in strong negotiating positions. However, there is never a loss of the desire to be paid and this is where payment plans can be constructed.
 

Banking and Finance

Secure or not secured that is the question; excuse the flippancy. Loss of a key asset or indeed the takeover of the business by a secured creditor is never going to be the desired outcome.
 
It is more and more common that security is taken outside of the trading assets of a business and is targeted directly towards individual’s assets.
 
A full understanding of the security position is a crucial starting point.
 
Knowledge and experience of likely recover strategies by financiers is essential.
 

Crown Creditors

Unlike the two categories above, enforcement action is often the only option available to a crown creditor. The loss of their preferential status in 2003 has only served to heighten the efficiency with which HMRC move in circumstances of default.
 
Aside from sending in the Bailiff; which is often fruitless in the current market of leased and financed assets; the best HMRC can do is to prevent a business from incurring any further debt as soon as possible. This means a company winding up petition or a personal bankruptcy order.
 
Goods relations and a strong reputation are crucial in dealing with these matters.