Chairman’s column

financial institutions. At a time when those of us working in debt collection and financial services come in for a lot of stick, it was refreshing to see delegates talk openly about areas in need of regulation, such as credit repair firms, as well as the need to work with customers to obtain payment. Despite what we read in the press, compassion is not dead in the financial services sector, with all sides acknowledging the need for debtors to talk to creditors. Working out affordable payment plans, write offs and effective collections is key. Speakers from the OFT, banks and other government departments were frank in talking about areas which require regulation, or where the market should adopt its own code of practice. I have been involved in a case

I

recently in obtaining an injunction to restrain the issuing of a Winding Up Petition against a client in respect of an assignment of debt taken from an Administrator. The client had sent a pro-forma invoice for a commodity subject to price fluctuation so that the client is entitled to render a further invoice prior to delivery for any increase in price, pursuant to its terms of sale. The client had sent the initial pro-forma invoice value which represented about 90 percent of the price of goods to be delivered which was paid. The debtor company went into administration without paying the balance, and through a pre-pack and group company tactics set up other similarly named companies which sadly were able to buy from the client other products which were not paid for. We were due to come to trial in

March, but in the meantime another associated company within the group took an assignment as the alleged debt of 90 percent of the value of the commodity from the Administrator for

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May 2010 www. icm.org.uk

was recently asked to chair the IEA Market Force’s conference on ‘The Future of Consumer Finance’, attended by most of our major

Speakers from the OFT, banks and other government departments were frank in talking about areas which require regulation, or where the market should adopt its own code of practice

the princely sum of £1 in respect of the 90 percent deposit paid which exceeded £10,000. There was no right of set-off in the terms and conditions of trading between the group of companies (which would be a difficult clause to draft and would require signature by all parties to enable it to be effective in any event). As a tactic, the associated company then served a Statutory Demand on our client which has an eight figure credit limit. There was no question of our client being insolvent, but the purpose of the Statutory Demand was to try and force our client into paying them something, and to try and get our client to walk away from the forthcoming trial in respect of the claim against the associated debtor for a far greater sum. Fortunately, no effective assignment

of the debt was notified to our client before service of the Statutory Demand and the client’s terms and conditions of sale effectively stopped any payment of the deposit in view of the default by the original customer. An injunction was obtained to restrain the issuing of a Winding Up Petition by the associated company, or any other, together with an order for costs assessed there and then. Winding Up action should never be used where there is clearly evidence of a disputed debt. The fact that I sent two letters to the solicitors prior to applying for the injunction showed that they were clearly acting in a bullish manner. Two weeks later I had exactly the

same situation arise in relation to a landlord client who had sub-let premises to an associated company after the

Governance

President

Master Robert Turner

Chief Executive

Philip King FICM CdipAF MBA

by Larry Coltman

Executive Board

David Ancliffe FICM Glen Bullivant FICM

Larry Coltman FICM – Chair Brenda Linger FICM Am/Ex Cert Ed Charlie Robertson FICM MABI – Vice Chair Claire Sandbrook FICM – Treasurer

Advisory Council

David Ancliffe FICM

Anthony Bown FICM FInstLEx

Glen Bullivant FICM

Larry Coltman FICM – Chair

Ruth Dixon FICM David Harrison FICM Carolyn Hobbs MICM Stuart Hopewell FICM

Mike Howson FICM JP

Brian Lewis FICM

Brenda Linger FICM Am/Ex Cert Ed

Stephen McCrory MICM Lynne Mills FICM Carole Morgan FICM

Charlie Robertson FICM MABI – Vice Chair Claire Sandbrook FICM – Treasurer

Richard Seadon FICM

Stephen Skipwith MICM(Grad) MIIM MBA

first tenant became embroiled in a shareholder dispute and failed to pay. Another associated company took an assignment and again sued the landlord even though the debt to the landlord in respect of rent for the period of occupation by one of the associated companies was far more than the assignment of a claim for a refund of the deposit originally paid by the first tenant. So creditors be warned, notwithstanding your customer may have gone into insolvency, it is possible that associated companies and their directors may try and take an assignment of a claim in respect of monies due from you, even if you may be owed more by their associated companies. It is intriguing why the insolvency

practitioners took no steps to try and recover the monies from either client and were only too willing to assign the benefit of the claims for either nominal or no consideration. Whatever happened to their duties to the other creditors, which included our client on each occasion? I suspect we will see more of this sharp practice with assignments, so be on your guard. Dealing with associated companies of customers who have gone bust usually ends in tears in my experience.

Larry Coltman

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