Posted On: Feb 24,2021

Legal measures to protect your business against debtor insolvency

The underlying number of company insolvencies in the UK increased year-on-year by 12.6 percent between April and June, a exhibiting the vast amount of damage debtor insolvency can put the creditor into. There are many legal negotiations that a creditor must be done with the debtor to remain a secured creditor as opposed to an unsecured creditor who is vulnerable and sole responsible to all types of insolvency by the debtor. Let me walk you through the legal steps to prevent such damages: Fixed charge: This involves the creditor being in charge of a fixed asset of the debtor so that the debtor cannot use this property until he pays off his dues. This is one of the most powerful ways to tackle nasty debtors. Parent company proofing: if the debtor company becomes insolvent, the creditor will reserve its rights to enforce the contractual obligations against the parent company. Parental company guarantees are a quasi-security measure, that is, in case where the parent company itself goes bankrupt, the creditor can take any use of this. Title clause retention: Frequently referred to as a “Romalpa clause” following the Court of Appeal decision in Aluminum Industry Vassen. This involves retention of the creditor name for the assets passed on to the debtor until full payment is done to the creditor. Pledge: This is the most common form of all, where a debtor pledges his asset to the creditor, and that is owned until payment and may be even sold by the creditor if the debtor fails to perform his obligations. Trust: For the purposes of an express trust, the debtor company will frequently establish a separate fund for guaranteeing repayment to an identified group of investors. Thus, there are many such legal measures you can take to avoid insolvency. It's better to hand over all such tasks to a trusted agency like RIZ BUSINESS SOLUTIONS, and focus only on development of your business in peace. Tricks to clean up business credit score! You may have been in business for long or recently started your startup. The question that comes up to you is "How to increase credit financing, the credit score!.." Let me walk you through some insightful ways to do so Debt Collection Solutions: The problem is, many companies do not have immediate access to the debt collection solutions that agencies like RIZ BUSINESS SOLUTIONS offer. We help you claim what belongs to you, thereby increase your credit score. Credit utilization ratio: Apart from paying off your bills, what keeps you on roll is the way you work on your credit utilization ratio. This can be done in many ways: Seek a debt collection agency to keep in control Pay off your bills frequently so that they don't become big one day Call creditors to increase credit limits Upgrade to auto bill payment: It becomes unnecessary that you have money ready and don't pay it off only because you forget the date /time of Payment. This will affect your credit score badly. Instead switch to some auto bill payment systems and keep your credit score mounting high.. Apart from this, see If Suppliers will establish Credit Accounts, and Don't Count on Accuracy with the Credit Bureaus! Better late than never to increase your credit score. So what are you waiting for?