What Should I Do To Resolve a Debt With the Bailiffs?

January 23, 2024 / FAQs

If your company has fallen behind on debt repayments, receiving a letter from the bailiffs is a distinct possibility. This is especially true for companies with aggressive creditors. A notice of enforcement indicates an impending visit from the bailiffs, who will attempt to seize your company’s assets as a form of repayment. While it is certainly difficult to receive such a notice positively, you shouldn’t panic.

Directors have a variety of options available to resolve a debt with the bailiffs, even if your situation looks hopeless on the surface.

In this article, Clarke Bell discusses the role of bailiffs, how they can impact your company, and what you can do to reach a favourable outcome.

What is a bailiff?

Bailiffs, commonly referred to as enforcement agents, are individuals who work to collect debts, usually by appointment of a court. Debt commonly collected by bailiffs includes County Court Judgments, tax arrears, criminal fines, and awards from civil court hearings.

As these debts have been heard in court already and are not simply unresolved disputes between two parties, bailiffs are much more of a threat to companies. Bailiffs operate with the backing of the courts, granting them more authority compared to other debt collection agents.

What can bailiffs do to a company?

As they work at the behest of the courts, bailiffs are able to take a more forceful approach to debt collection. While this authority allows bailiffs to take a range of actions, there are two key actions directors should be aware of: entering property and taking assets.

Can bailiffs force entry?

Depending on the circumstances, bailiffs can force an entry into your company’s premises. A forceful entry can be attempted if they have a warrant, or are collecting a criminal debt. These situations essentially remove any right to turn bailiffs away, and can result in legal action should company owners attempt to force bailiffs out. However, company owners are still entitled to ask to see the warrant, the bailiff’s identification, and ask questions related to the debt.

If you are not present when bailiffs arrive at your company’s premises, they may attempt a “peaceful entry”. This kind of entry requires an unlocked door or window, allowing bailiffs to gain entry without using force, coercion, or possessing a warrant. A “peaceful entry” allows bailiffs to make a note of company assets that can be seized at a later date. If you receive an enforcement notice from bailiffs, it is best to either solve the issue before they arrive, or ensure you are present when they visit your company.

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What can bailiffs take?

Once bailiffs have gained entry into a company’s premises, they may begin listing assets for seizure on subsequent visits. Eligible assets include most assets typically owned by a company, ranging from vehicles to equipment, and even stock. However, bailiffs will generally prefer to take assets that are not crucial to a company’s operations, avoiding any unnecessary harm. If the debt is not repaid, then bailiffs will seize assets equivalent to the outstanding loan.

How can directors resolve a debt with the bailiffs?

Receiving a letter from the bailiffs is certainly concerning, but it isn’t necessarily the end of the line for a company. Directors have a number of ways to respond to contact from the bailiffs, ranging from negotiation to insolvency procedures. The following are some of the most commonly used methods of resolving a debt with the bailiffs.

Making a full repayment

Where possible, the simplest solution is to make a full repayment of the debt that is owed. Bailiffs aren’t focused on seizing your company’s assets; they simply want to collect a debt on behalf of their client. While that can come in the form of assets, bailiffs will be more than happy to facilitate the repayment of the debt, either directly with your creditor, or via the bailiffs themselves.

Negotiating with bailiffs

If a full repayment cannot be made, but your company is still solvent and viable in the long term, you may be able to negotiate a repayment agreement. Assuming you are present when the bailiffs visit, negotiating with them is entirely possible. Again, bailiffs are primarily concerned with collecting a debt, and are often willing to negotiate if it can help achieve this aim.

Company Voluntary Arrangement

If bailiffs are not willing to negotiate, or you would prefer to communicate with your creditor directly, you may want to consider a Company Voluntary Arrangement (CVA). A CVA is essentially a revised repayment agreement, allowing companies to put forward a reasonable new repayment agreement that benefits both parties. Ideally, a CVA will buy a company some time, while still ensuring creditors get what they’re owed in the end. In order for a CVA to be an option, your company will need to have a viable business model and agreeable creditors.

Creditors’ Voluntary Liquidation

Creditors’ Voluntary Liquidation (CVL) can be a great solution for insolvent companies that cannot repay the debt in question. Rather than allowing bailiffs to seize assets, likely causing the situation to spiral, a CVL grants companies a reliable means of handling all their debt problems.

Directors begin the procedure by discussing their case with an insolvency practitioner (like Clarke Bell). Having heard their professional advice, the directors will then appointing an insolvency practitioner of their choosing to the role of liquidator. While in this role, the insolvency practitioner will assume control over the company, ensuring all assets are liquidated as efficiently as possible, and that the proceeds are distributed amongst outstanding creditors. Once all distributions have been made, the company will be wound up and removed from the Companies House register. After this point, any remaining debts will be written off, except those secured by a personal guarantee.

For more information regarding CVLs and their benefits, read our complete guide to the procedure.

Let Clarke Bell help

Receiving a letter from the bailiffs can be a serious problem. If left unchecked, it can quickly mean the seizure of your company’s assets, potentially causing damage to your company’s normal operations. However, there are options available to directors, no matter how dire the situation may seem.

Clarke Bell can help you find the best option for your company.

We have more than 29 years of experience in helping companies solve their financial issues. We can do the same for you. Our team of experts can help you identify and implement the best solution to your company’s financial problems. The best option is normally a Creditors’ Voluntary Liquidation. However, is this is not right for you, we will tell you what is.

Contact us today for your free, no-obligation consultation and find out exactly what we can do for you.