Creditor Services in association with Leonard Curtis
About Leonard Curtis
Leonard Curtis Business Solutions Group is a market leading professional services provider operating from 21 locations across the UK. We are dedicated to dealing with financial and operational issues that SME owners and their stakeholders face at every stage of the business lifecycle.
Our expert team of specialists deliver positive strategic advice across restructuring, law and finance. This range of services enables us to tailor unique solutions to whatever problems a business owner may encounter.
Have you received formal notification that one of your customers has entered an insolvency process and need help?
There are different types of insolvency process – relating to companies, individuals (personal individuals and sole traders) or unincorporated partnerships. The correspondence you receive from an Insolvency Practitioner (IP) will tell you what type, but here’s some explanation of the main commonly used processes:
Insolvency of individuals and sole traders
Understanding the likely outcome for you
In some cases, the information you receive will include a report containing an Estimated Outcome Statement (EOS) or a Statement of Affairs (SOA), which show the likely return to unsecured creditors before costs of the insolvency process. Unless you have security like a mortgage or legal charge then you will be classed as an unsecured creditor.
The initial correspondence you receive is often at the early stage of an insolvency and so it may not be possible for the IP to estimate what the final outcome is going to be. However if it says something like “we do not anticipate making a return to unsecured creditors in this case” then you can be fairly sure you won’t get any money back and therefore may decide not to engage further with the process other than making sure you inform the IP how much you’re owed.
Actions by you
The correspondence will provide instructions for two key things:
- Submitting a proof of debt form so the IP knows how much you are owed. This will enable them to calculate how much you receive back in the event that there is a return to creditors – although payments are not normally significant (if anything)
- Voting in the decision processes in relation to the insolvency
On both of these points, there are a number of common forms for you to complete. Your correspondence will tell you where and when to send them but, for clarity, we’ve got some useful practical guidance here.
Common forms to complete and return
- Proof of debt (submitting your claim so the IP knows how much you’re owed)
- Proxy form (voting at a meeting whether virtual or in person)
- Voting form (voting where there is no physical meeting, but business is conducted by correspondence)
If the bad debt is causing you a problem and you need some advice
In many cases, unsecured creditors get nothing back when a customer goes into an insolvency process. If there is a return to creditors then it is not normally a significant percentage and creditors often have to wait a long time before they receive anything from the IP.
If this is going to cause problems for your own cash flow and you’d like some free, no obligation advice on your options, then email Rik at Leonard Curtis.