“My debtor is closing down at the end of the month. We need to sue quickly!”
A client told me this recently. Understandably, they were worried that if we didn’t act immediately, they would never get their money back.
But my first question was: does the company still have anything left to pay you with?
If the business has genuinely failed, the money is gone and there are no worthwhile assets left, suing faster won’t solve that problem. You could spend thousands more, win the case, and still recover nothing.
Your lawyer gets paid. You still don’t.
Of course, we shouldn’t simply believe a debtor who says, “We’re closing down.” We need to check. Is there still money or property? Are they actually continuing the same business under another company? Did the boss personally promise to pay if the company couldn’t? Is there evidence of wrongdoing that gives us another way to recover the money?
The boss doesn’t automatically owe you the money personally just because their company cannot pay.
But if we check and there really is nothing worth chasing, I would rather tell my client to stop spending than encourage them to throw more money at it.
If the company is being formally closed down, we can check whether there is any money left to share among the people it owes. We can also prepare records of the unpaid debt and our attempts to collect it, so the client’s accountant can assess whether the loss qualifies for a tax deduction. That doesn’t get the debt back, and it isn’t automatic, but it may be more useful than paying for another court case.
As a debt recovery lawyer, I should be helping you decide whether spending more money will actually help you get paid. That includes telling you when further action is unlikely to be worth the cost.
There is no point helping my client turn one loss into two.
Rudi Cheu (rudi@rulecolaw.com) is a content creator under the Newswav Creator programme, where you get to express yourself, be a citizen journalist, and at the same time monetize your content & reach millions of users on Newswav. Log in to creator.newswav.com and become a Newswav Creator now!
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