What Are My Rights as a Limited Company Against Bailiffs?

January 10, 2024 / FAQs

Limited companies that have fallen into debt arrears may receive a visit from the bailiffs. Creditors often turn to the bailiffs as a means of debt recovery, after other methods have failed to produce the desired results. However, some creditors are quick to call in the bailiffs, perhaps not affording a company enough time to address the situation amicably.

Whatever the case, if your company is facing a visit from the bailiffs, it is important to know what your rights are and what they have the power to do.

In this guide, Clarke Bell explains the powers of the bailiffs, what your rights are as a limited company, and how you can respond to a visit.

Who are the bailiffs?

Bailiffs, also known as enforcement officers, are individuals charged with the repossession of assets as a means of debt repayment. Creditors can call bailiffs in once a debtor has fallen behind on their monthly repayments, and when other debt recovery methods have failed. Precisely when the bailiffs will be called varies between creditors. Once called in, bailiffs will attempt to recover a debt on their client’s behalf, typically through the seizure of assets.

What can the bailiffs do?

Bailiffs usually operate with the backing of the courts, either due to a direct court appointment to a case, or the possession of a warrant. This gives bailiffs a great deal of options and authority when pursuing a debt, something debt collectors lack. As such, bailiffs pose a much greater threat to a company than debt collectors.

Do bailiffs have power of entry?

In most cases, bailiffs do have power of entry and can generally enter your company’s premises at will, although they typically prefer to do so after meeting you in person. If you choose to meet the bailiffs once they arrive, you may ask to see a warrant. Bailiffs will usually only visit a debtor when they have a warrant. If your bailiffs fail to produce a warrant, you may demand they leave. Upon a subsequent return, bailiffs will be able to enter your company’s premises to carry out their task.

If the bailiffs visit your company while you are out, they can still attempt an entry. Bailiffs will usually look for unlocked doors or windows, and may attempt a “peaceable entry” should they find any. However, bailiffs may also attempt a forceful entry once they have the proper legal justification.

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Can bailiffs take my company’s assets?

Upon gaining entry to your company’s premises, bailiffs will first make a note of all company-owned assets. In doing so, they can organise assets according to their value, while also creating legal evidence of what they found. Should anything listed be removed from the company, this list can be used in court.

Once the bailiffs have made a note of your company’s assets, they will mark the assets they intend to seize during a secondary visit. This can include a wide variety of assets, from company vehicles to stock, though it excludes assets not explicitly owned by your company. In general, bailiffs will prefer a few assets of a higher value to large quantities of low-value assets, and will prioritise assets that don’t contribute to critical operations for your company. The main priority of the bailiffs is to collect their client’s debt, but that doesn’t mean they want your company to fail.

Your rights as a limited company

Bailiffs have a significant amount of leeway when collecting a debt, but they are not completely unrestrained. You have several rights as a limited company, beginning with the refusal of entry in certain cases. When asked, you may refuse bailiffs entry to your company, which is generally advisable on their first visit. Refusing entry can give you time to act, either organising a means of repayment, or implementing an insolvency procedure. You may also refuse bailiffs entry on subsequent visits, provided they do not have a Court Order. They cannot attempt to force entry if you have explicitly refused them. If the bailiffs try to force their way past you, it can constitute harassment.

If bailiffs have gained entry into your company, they must be extremely careful when assessing assets. Should the bailiffs cause any damage to assets, or attempt to remove anything from your company without proper authorisation, you may have grounds to sue.

As a debtor, you have the right to inquire about the debt your bailiffs aim to recover. You are entitled to ask a range of questions, including the amount payable, the kind of debt being collected, and other specifics. Having a proper understanding of what the bailiffs are after can help you formulate a good response, and may even help you open the door to negotiation.

Responding to a visit from the bailiffs

If the bailiffs have visited your company, or you are expecting a visit soon, swift action is paramount to avoid the situation from getting worse. Thankfully, limited companies have a number of options at their disposal, which can be implemented with the help of a licensed insolvency practitioner.

Company Voluntary Arrangement

Bailiffs are tasked with recovering a debt, but this doesn’t have to be through the seizure of assets or a lump sum repayment. It is possible to negotiate a repayment agreement with bailiffs, provided you have outlined a viable means of repayment.

If the bailiffs refuse to negotiate, you may instead speak directly with your creditor. Proposing a Company Voluntary Arrangement (CVA) can be a good solution for both parties, assuming your company has a viable business model and is capable of keeping up with revised repayments. The assistance of a licensed insolvency practitioner can be incredibly helpful during this negotiation, and can help mediate discussions to prevent the situation from escalating. If your CVA is accepted, it can provide your company with much-needed breathing room and prevent the bailiffs from seizing your company’s assets. That said, CVAs are not often the best option available.

Creditors’ Voluntary Liquidation

If your company is threatened by the bailiffs, but has no viable means of repaying the debt, then it is likely insolvent. To avoid any further escalation, a Creditors’ Voluntary Liquidation (CVL) is often the best option.

The CVL process affords directors of insolvent companies a solution for dealing with a company’s debts. The company will be liquidated by an insolvency practitioner of the directors’ choice, who will then distribute any monetary proceeds amongst outstanding creditors. The company will then be closed, and all remaining debts will be written off. By using this procedure, directors will remove their company debt problem, while also demonstrating initiative to act in the interests of their creditors. In doing so, they will be largely protected from accusations of misconduct. For a more detailed look at CVLs and their benefits, read our complete guide to the CVL procedure.

Clarke Bell can help

An impending visit from the bailiffs is not an ideal position for any company to be in. Receiving a visit from the bailiffs can cause your company serious financial harm, as well as a lot of stress. It can be easy to feel as though the situation has slipped outside of your control.

However, you do have several options available to you. Clarke Bell can help you find the best one.

We have more than 29 years of experience in helping companies find solutions to their problems, whether it be responding to the bailiffs or making a financial recovery. We can do the same for you.

Don’t hesitate to contact us today for a free, no-obligation consultation and find out exactly what we can do for you.