Debt Recovery and Insolvency fees for claims up to £100,00.00

At Fletcher Day, we have a skilled team of commercial litigators who can advise your business on the recovery of debts to assist with your cash flow.

We are a City of London firm and provide a bespoke service tailored to each client.

An indication of our fees for debts of up to £100,000.00 for business-to-business debts against debtors based in England and Wales is set out below. However, we can provide a more detailed costs estimate once we have spoken to you and have a better understanding of the nature of your claim.

Our fees are based on the hourly rates of our team members which are set out at the bottom of this page.

Any estimate given below is on the following basis: –

  • You provide us with all the documentation requested at the outset of the matter and assist us promptly in providing further information as requested;
  • You provide us with the correct name and address for the debtor; and

There is no known dispute on the debt or argument as to set-off or counterclaims.

  1. COUNTY COURT PROCEEDINGS

Pre-action costs

The first stage before proceedings can be issued is that we will need to take your instructions on the nature of the debt, obtain any preliminary evidence and send a formal letter before action to the debtor requesting payment of the outstanding debt. This step is required before proceedings can be issued.

Normally, a letter before action will allow the debtor 14 days to respond. Very often a debtor will pay once a solicitors’ letter is received.

For a straightforward matter, our estimated costs of sending a letter before action is as follows: –

  • Non-disputed debt: £500.00 plus VAT
  • Disputed debt: £750.00 plus VAT

This estimate will include taking your instructions, reviewing paperwork provided, drafting a letter before action and reporting to you on any response. If having drafted the letter before action, you then provide us with further documents or information not previously provided which requires us to redraft or amend the letter before action, we will charge you for this time in addition to our basic charge.

If the matter is more complex, then we will let you have a more detailed estimate; for example, if there is more than one debt and those debts arise out of different events or contracts.

In some cases, it may be appropriate to conduct a trace to locate a debtor or an asset search to ascertain their means to pay. If so, we can provide you with an estimate of costs for any additional work that needs to be carried out.

Issuing proceedings

The costs that we will charge for issuing proceedings are likely to be in the region of £750.00 – £1,500.00 plus VAT depending on the amount claimed and the complexity of the matter. This will include the cost of us drafting the Claim Form and the Particulars of Claim, issuing the claim at Court, reporting to you and entering default judgment if the Defendant does not Acknowledge the claim (see below) or Serve a Defence having previously Acknowledged.

There will also be a Court fee which is calculated for claims of up to £10,000.00 on a sliding scale. Please see here for a link to the Court service website which provides up-to-date information on Court fees.

For any debt over £10,000.00, the Court fee is 5% of the value of the claim if it is issued on paper or 4.5% of the value of the claim if it is issued online.

Once a claim is issued, a Defendant will usually have 14 days to file an Acknowledgement of Service and then a further 14 days to file a Defence. If the Defendant does not file or serve either of these, then you can apply to enter judgment in default.

If judgment is obtained but is not paid, there will be further costs to enforce this and we will provide you with a further estimate of these costs if you decide to follow this route.

If the matter becomes contested, then we will let you have an estimate of costs for dealing with the case on our hourly rates. The estimate will depend on the nature of any Defence, which will determine how the claim is to be dealt with.

Depending on the circumstances of the case, we may be able to offer a Conditional Fee Agreement, a Damages Based Agreement or an alternative method of funding the claim.

There are a number of points to consider when issuing a claim:

  • If the claim is for less than £10,000.00, you will not recover your costs even if you are successful. That will mean that any costs you pay to us will be irrecoverable, save for the court fee.
  • In other matters, if you obtain judgment in default of either an Acknowledgment of Service or Defence, then you will only be able to recover fixed costs. In these cases, for a debt of £100,000.00, you would only recover costs of £130.00 – £135.00 plus the court fee you paid.
  • Once a claim is defended, if you are successful, you will normally only recover a percentage of your costs (50 – 65%) from the other side. You will always suffer a shortfall on the costs you spend with us. If you lose, you will be liable for the other side’s costs as well as your own. Those costs will normally be 50 to 65% of that party’s costs.
  • Once proceedings are issued, you can only withdraw from these:
    • if you settle the claim on agreed terms, including which party will pay the other’s costs; or
    • in the absence of agreement, by discontinuing the proceedings, in which case normally you must pay the other side’s costs.

 

  1. INSOLVENCY PROCEEDINGS

The precursor to the presentation of a Bankruptcy Petition (individual) or Winding Up Petition (company) is the service of a Statutory Demand demanding payment of the debt within 21 days.

A Statutory Demand should not be served if you know that the debt is disputed as in the case of a Statutory Demand served on an individual, it is possible for the Debtor to apply to set it aside. If that application is successful, then you will have to pay the Debtor’s legal costs. Companies cannot apply to set aside a Statutory Demand but can apply to the court to injunct (prevent) the presentation and service of a Winding Up Petition. If such an application is made and is successful you will normally be ordered to pay the company’s costs of that application.

There are minimum financial limits required to be able to present a Bankruptcy Petition and a Winding up Petition. They are £5,000.00 in the case of Bankruptcy and £750 in the case of Winding Up.

 

Bankruptcy Proceedings

The cost of drafting a Statutory Demand is likely to be in the region of £750.00 plus VAT for a straightforward matter. There is also a process server’s fee of circa £100.00 to £150.00 plus VAT as it must be served personally on an individual. As set out above a Statutory Demand gives the debtor 21 days to pay the debt, unless he disputes the debt, in which case he must make an application to set aside the Statutory Demand within 18 days of service upon him. If having been served with a Statutory Demand the Debtor (in the absence of having applied to set the Demand aside) does not make payment of the debt within 21 days, this is deemed evidence that the Debtor is unable to pay his/her debts as they fall due. A Bankruptcy Petition can then be presented to the Court and served on the Debtor.

The costs for a non-disputed Bankruptcy Petition are likely to be as follows:

  • Drafting, issuing and serving Bankruptcy Petition and all steps taken to go to Court/attendance at court: circa £1,500.00 to £3,000.00 plus VAT
  • Court fee for issuing petition: £280.00
  • Official Receiver’s deposit: £990.00 (this is partially refunded if you do not ultimately proceed)
  • Process server’s fee: circa £100.00 to £150.00 plus VAT

If the Statutory Demand is disputed and an application is made to set it aside, we will provide you with an estimate of costs for opposing that application.

If the Debtor decides to oppose the making of a Bankruptcy order once served with a Petition, we will provide you with an estimate of costs/increased costs for dealing with that opposition.

A petition can usually be issued quickly once instructions are received and it will usually take 6 weeks to 3 months to reach a final hearing although there will presently be delays due to the COVID-19 pandemic.

 

Winding Up Proceedings

Please note, following the introduction of Corporate Insolvency and Governance Act 2020 (and subsequent regulations/amendments) there are restrictions on serving Statutory Demands and presenting Winding Up Petitions until 1 January 2021 at the earliest.

The cost of drafting a Statutory Demand is likely to be in the region of £750.00 plus VAT for a straightforward matter. There is also a process server’s fee of circa £100.00 to £150 plus VAT as it must be served personally at the company’s registered office.

As set out above, a Statutory Demand gives the debtor 21 days to pay the debt, unless the company applies for and obtains an injunction preventing the presentation of a winding up petition. If having been served with a Statutory Demand the Debtor (in the absence of obtaining an injunction) does not make payment of the debt within 21 days, this is deemed evidence that it is unable to pay its debts as they fall due. A Winding Up Petition can then be presented to the Court and served on the Debtor.

In some cases, it is not necessary to serve a Statutory Demand on a Company prior to a Winding Up Petition, particularly if the Debt has been admitted. However, there are good reasons to do so. The first is that a Statutory Demand is not a document of public record and therefore no other creditors will know about it, thus not alerting them to serve their own Statutory Demand or Winding Up Petition. The second is that failure to pay a sum demanded by a Statutory Demand is the necessary evidence that a company is unable to pay its debts as they fall due, which is a ground for the making of a Winding Up Order.

The costs for a non-disputed Winding Up Petition are likely to be as follows:

  • Drafting, issuing and serving winding up petition and all steps taken to go to Court/attendance at court: circa £2,500.00 to £3,500.00 plus VAT
  • Court fee for issuing petition: £280.00
  • Official Receiver’s deposit: £1,600.00 (this is partially refunded if you do not ultimately proceed)
  • Process server’s fee: circa £100.00 to £150.00 plus VAT
  • London Gazette advertisement fee: circa £84.00 to £125.00

If the Statutory Demand is disputed and an application is made to injunct its presentation, we will provide you with an estimate of costs for opposing that application.

If the Debtor decides to oppose the making of a Winding Up Order once served with a Petition, we will provide you with an estimate of costs/increased costs for dealing with that opposition.

A petition can usually be issued quickly once instructions are received and it will usually take 6 weeks to 3 months to reach a final hearing although there will presently be delays due to the COVID-19 pandemic.

CHARGE OUT RATES

Our commercial litigation team comprises of the following solicitors.

Paul Nathan (Partner – Qualified 1983): £395.00 plus VAT per hour

Alice Lithgow (Partner – Qualified 2004): £350.00 plus VAT per hour

Luiz Costa (Senior Associate Solicitor – Qualified 2012): £300.00 plus VAT per hour

Abtin Yeganeh (Solicitor – Qualified 2018): £250.00 plus VAT per hour

Shriya Chandarana (Paralegal): £175.00 plus VAT per hour

Frequently Asked Questions

FAQ 1

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FAQ 2

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