In short
What differs when the debtor is a limited company, from entity identification to the pre-action framework and escalation options.
Identify the company, not the brand
Invoices are frequently addressed to a trading name rather than to the contracting company. Companies House records, the contract and the order documentation are used to establish which registered entity is liable.
The applicable pre-action framework
Where the debtor is a limited company, the Pre-Action Protocol for Debt Claims does not apply in the way it can where the debtor is an individual or sole trader. The general requirements of the Practice Direction on Pre-Action Conduct and Protocols are usually the relevant framework.
Checking substance before escalating
Filed accounts, charges, changes of officers and any insolvency information available at Companies House give an indication of whether the company can satisfy a claim. This should inform the decision to escalate.
Escalation options
Court proceedings and insolvency processes serve different purposes. Insolvency routes are not appropriate where the debt is genuinely disputed on substantial grounds, and their use in such circumstances can attract adverse consequences.
Frequently asked
- Can a director be pursued personally?
- Generally not, unless there is a personal guarantee or another distinct basis of personal liability. Any guarantee documentation should be reviewed at the assessment stage.
Sources & references
- Civil Procedure Rules and the Practice Direction on Pre-Action Conduct and Protocols
- Pre-Action Protocol for Debt Claims
- Late Payment of Commercial Debts (Interest) Act 1998
- [INSERT ADDITIONAL VERIFIED SOURCES USED FOR THIS GUIDE]
This guide is general information only and does not constitute legal advice. Procedures described relate principally to England and Wales. Every matter is assessed on its own facts and contractual documentation.