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Businesses turning to the insolvency procedure to recover debt

3 July 2009

More and more businesses are using the insolvency route to chase debts owed by debtors, according to one of Sheffield's most respected law firms.

Ashton Morton Slack on North Church Street has seen an increase in the number of businesses seeking advice about debt recovery and credit control, which can be difficult to bring about effectively. .

Solicitor, Michael Doherty, is part of Ashton Morton Slack's civil litigation team, which also includes partners Robert Bryars and Tim Barlow.   

Michael, 32, admits that with the current economic climate businesses are looking at the insolvency procedure as an alternative to issuing Court proceedings, which can be an expensive and drawn out process.

He said: "We are definitely seeing more people using the insolvency procedure to chase debtors. It is a useful tool to get money back quickly. However, it can be a double-edged sword, especially if there is any dispute over the debt."

For the inexperienced applicant, pursuing the insolvency route can be a mine-field of legal complexities and pitfalls, therefore, many companies need legal advice before deciding to proceed.

Ashton Morton Slack's experienced team in both commercial and civil litigation can provide that support and advice.  

Michael added: "To start pursuing a debt down the insolvency procedure route, it is usual for a creditor to serve what is known as a Statutory Demand upon the debtor. The debtor then only has 21 days to pay the debt or faces the possibility of insolvency or, in the case of an individual, bankruptcy.

"In my experience, once a debtor has been served with a Statutory Demand they tend to sit up and take notice. It is a very useful tool to get uncooperative, elusive debtors to the negotiating table.

"However, the insolvency procedure can only ever be used to recover undisputed debts worth over £750."   

Ashton Morton Slack has more than a century of experience in dealing with wide range of personal and corporate issues.

The team can provide a variety of legal support for businesses, including property, commercial and civil litigation.

For more information visit http://www.ashtonmortonslack.co.uk/, call 0114 275 2888 or email info@ashtonmortonslack.co.uk.