Lending is a risky business. Companies that are facing financial problems (or worse) can be difficult to detect for lenders and businesses providing credit terms.
‘Lending’ extends beyond just banks and private lenders providing funds. Any business that provides credit terms is ‘on the hook’ should a customer become financially distressed. Landlords, service providers and businesses with large supply chains are often highly exposed.
Like most things in life (and law), prevention is the best medicine. Working closely with our Business Advisory Team, we can provide you with contractual agreements such as terms of trade that increase your collection rights if a customer does not pay or comes under formal financial distress such as being placed into administration or being declared insolvent.
We work with businesses to include a ‘retention of title’ clause in contracts whereby a customer does not own the title of the goods provided until the full amount has been paid. We ensure that if you are selling or renting out your goods, that they have been added to the Personal Property Securities Register in a compliant manner. Both tools are incredibly effective for recovering the debt or preventing the loss of goods.
For secured creditors, we work with you to pursue assets and guarantors, and help resolve priority contests between other creditors. We can advise you on terminating contracts if a customer defaults and determine a final cost that must be paid immediately – even if there was significant time left to pay according to the contract.
Given our experience in the property sector, we’ve also advised countless landlords on how to handle an insolvent tenant and served eviction notices on their behalf.
To ensure you have the best leg to stand on before things go awry, our Banking & Finance and Business Advisory Teams can assist you with clear and comprehensive documentation. But when things turn pear-shaped, you can count on our Dispute Resolution & Litigation Team to get you a positive outcome.
Your business needs to protect itself from things outside of its control – such as another business’ financial certainty and solvency. Contact Madgwicks for advice and tactics on minimising your business’ exposure.