If your limited company is in debt and a creditor has appointed bailiffs to collect what is owed on their behalf, it’s crucial that you know what powers the bailiffs hold.
Clarke Bell understands that this can be a stressful and challenging time for directors. To help you, we have put together this handy guide explaining the powers bailiffs have.
What are bailiffs?
It is important to understand that there are different types of bailiffs, each holding different powers.
There are two types of bailiffs – a High Court Enforcement Officer and a debt collector.
What powers do bailiffs have?
A High Court Enforcement Officer acts on behalf of the courts and therefore has greater powers than a debt collector.
These officers can forcibly enter a building – as long as they have failed to gain entry through all other options. They have the power to recover items equal to the value of the debt, as well as any interest and enforcement costs that have accrued.
A debt collector, on the other hand, is hired by creditors who are owed money. They don’t hold the same powers that High Court Enforcement Officers do.
A debt collector’s power is more restricted – they can request and remind you to repay the debt that is owed. They also have the power to collect money for the debt, which includes loans, utilities and credit cards.
With regards to a limited company with debts, a bailiff’s initial role is to reach a repayment agreement with the debtor.
If this fails, the bailiff will then make a visit to the business premises with the objective to seize goods worth the value of the debt that is owed.
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Can bailiffs force entry?
Bailiffs can force entry on the first visit to the premises. However, debt collectors cannot force entry or take any goods without permission.
Debt collectors must leave if you ask them to and they don’t have the power to act if you don’t invite them in.
You should be given an enforcement notice seven days before the bailiff plans to visit the premises. The visit will usually occur between 6am – 9pm and can happen on any day of the week.
If you are able to pay the debt, then you should contact the bailiffs as soon as possible to settle the amount. This will stop the bailiffs from visiting the premises and prevent you from incurring additional fees.
What can the bailiffs seize?
It is important to note that bailiffs can only force entry and seize certain assets from a business which they will take as a form of payment.
As a limited company is a separate legal entity from its directors, a bailiff can only ever take items that belong to the company. This means that the directors’ personal assets won’t be seized or affected.
During their first visit to the business premises, the bailiff will put together a list of goods that will be taken and sold at auction in order to raise funds to repay debts.
A bailiff can take the following from a limited company:
- Office equipment
- Business machinery
- Company vehicles
However, the bailiff can’t take:
- Rented property
- Anything that does not belong to the company
- Any leased items or those that are under a hire purchase agreement
- Vehicles displaying a disabled badge
- Assets that are essential to the business worth up to £1,350
A director can negotiate a payment installment plan to avoid having company assets seized, however. If a repayment plan is agreed, you will usually be able to keep the goods listed, as long as you agree to meet the terms outlined in the agreement and signed a Controlled Goods Agreement.
How to stop bailiffs
If your company is being threatened with visits from bailiffs, then it is important that you act quickly.
You should seek advice from Clarke Bell as soon as possible. We have more than 28 years’ experience in dealing with company insolvencies and we can advise you on what to do now.
Depending on your company’s situation, there will be a few different options available to you, including:
– Close the company: if the company debts are severe and repayment is not possible then the best option may be to close the company. An insolvent company must be closed in the correct manner, usually through a Creditors’ Voluntary Liquidation (CVL). Find out more about the CVL process in our handy guide.
– Create an informal repayment arrangement: to avoid having to close the company, another option is to put together an informal repayment arrangement. For example, if your debt is to HMRC, you can look into a Time to Pay Arrangement which is an informal agreement relating to tax-related debts.
– Create a formal repayment arrangement: alternatively, for companies that have debts with other parties, a formal repayment arrangement can be made such as a Company Voluntary Arrangement (CVA.) Find out more in our guide to CVAs.
– Restructure the company: the final option is to restructure the company if repaying the debt in installments isn’t a viable option. Here, putting the company into administration may be the best option.
Find the best option with the help of Clarke Bell
If your business is experiencing financial difficulties and action by bailiffs, you should seek the advice of insolvency experts as soon as possible. Thankfully, Clarke Bell is here to help.
Our team will work closely with your business to advise on the best options for you, whether that is to come to an agreement with creditors through a CVA, or whether liquidation would be the best route forward under the circumstances.
To see how we can help you, simply get in touch today.