A company with nothing behind it is the most common reason a judgment produces no money. But “the company has nothing” is a conclusion, and it is usually reached before anyone has checked the four things that most often change the answer.
Look at the Filings First
Company information is public, cheap and consistently under-used. Filed accounts — whether they have been filed at all, how recently, and what they show, however historic. Late or absent filings are themselves a signal. Registered charges, which tell you what security exists and who ranks ahead of you — a company with a substantial charge in favour of a lender may have very little available to an unsecured creditor even if it looks well equipped. Judgments already registered, indicating other creditors are ahead of you in the same queue. Directors’ other appointments, which sometimes reveal a pattern of companies established and abandoned. None of this is conclusive and all accounts are out of date by the time you read them — but a creditor who has looked makes a materially better decision than one who has not, and the cost is trivial against the cost of proceedings.
Four Questions Before You Write It Off
1. Is there a personal guarantee? Guarantees from directors or shareholders are common in trade credit and are frequently forgotten by everyone, including the guarantor. Go back through the account opening documents. A guarantee turns a worthless corporate debt into a claim against an individual who may well own a house. Note that a guarantee executed under seal may carry a twelve-year rather than a six-year limitation period. 2. Is there retention of title? If your terms of trade reserve title until payment and the goods are still identifiable and unsold, you may be recovering your own property rather than queueing as an unsecured creditor. 3. Did you take security and never register or enforce it? It happens more than you would expect. 4. Has the business been transferred to a new entity? Where a trade, its customers and its assets have moved to a newly incorporated company while the debts stayed behind, that raises questions worth asking rather than accepting. And if the company is heading for liquidation, ensure your claim is properly documented so it can be proved — ranking low is better than not ranking at all.
The prevention point, for next time: personal guarantees and retention of title clauses are cheap to put into terms of trade and are exactly what you will wish you had when a customer fails. Reviewing your terms costs a fraction of one bad debt.
Before writing a company debt off: 01 5827148.
Richard O’Shea — Solicitor
Solicitor at Mary Molloy Solicitors, established 1981, with offices at The Ormond Building on Ormond Quay — a short walk from the Four Courts. The firm advises creditors on recovery and enforcement, and, in separate matters, advises debtors who have received demands or proceedings. It is a law firm and not a debt collection agency: fees are agreed in writing at the outset and are never calculated as a percentage or proportion of what is recovered. 01 5827148 · richardoshea@marymolloysolicitors.com · LinkedIn
General information, not legal advice. This website contains general information about Irish law on debt recovery and enforcement. It is not legal advice and does not create a solicitor—client relationship. Every debt turns on its own facts — the documents, the dates, the parties and the debtor’s circumstances — and advice on yours requires a consultation. Statutory thresholds and figures referred to on this site are subject to change and should be confirmed before any step is taken.
A law firm, not a debt collection agency. Mary Molloy Solicitors provides legal advice and representation. It does not operate as a debt collection agency and does not conduct collection campaigns. Fees are agreed in writing with the client at the outset and are never calculated as a percentage or proportion of any sum recovered. In contentious business, a solicitor may not calculate fees or other charges as a percentage or proportion of any award or settlement.
No outcome is promised. Nothing on this site states or implies that any debt will be recovered, that any asset will be found, that any enforcement step will succeed, or that any claim will succeed. Recovery depends substantially on the debtor’s means, which are frequently unknown at the outset.
How payment may be demanded is regulated. Section 11 of the Consumer Credit Act 1995 makes it an offence to make a demand for payment by means calculated to cause alarm, distress or humiliation, or falsely to represent that legal proceedings have been or will be issued. Nothing on this site should be read as encouraging any such conduct. Mortgage arrears on a principal private residence are dealt with under a separate regulatory framework and are outside the scope of this site.
If you are the person being pursued. Free, confidential and independent money advice is available in Ireland from MABS, the Money Advice and Budgeting Service, and through the Abhaile scheme for people in mortgage arrears. You do not have to engage a solicitor to get help, and taking advice early generally improves the options available. This firm advises debtors in matters separate from those in which it acts for a creditor, and never both sides of the same debt — conflicts are checked before any substantive discussion.
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