Collecting a debt from a business is different than collecting a debt from an individual. Different rules apply, making different collection tactics necessary. Frequently, the debt collection laws most people know apply to debtors who are people, not companies.
Therefore, when an organization needs to collect a debt owed by another business, it can be difficult to know how to proceed. Business litigation often plays an important role in addressing outstanding company debts. In some cases, asking the courts to initiate receivership could help resolve debt issues.
Creditors can ask for assistance
There are several solutions potentially possible when creditors sue businesses that owe money. The courts can order a judgment in favor of the plaintiff organization. It may be possible to use a company’s assets to cover the debt or to place liens against the most valuable resources owned by an organization that has fallen behind on its debts.
Sometimes, the leaders of a business insist that current financial challenges prevent the repayment of creditors. They claim their lack of payment is a reflection of their efforts to improve the company’s finances.
In such scenarios, requesting receivership may be an option for frustrated creditors. Receivership occurs when the courts appoint an outside professional to assume authority over the company temporarily.
The receiver reviews assets, reworks daily operations and tries to address the company’s financial issues. When used appropriately, receivership can potentially lead to improved budgets and the repayment of creditors.
Discussing an unpaid balance due and prior collection efforts with a skilled legal team can help companies determine if business litigation might be the best option. Exploring different solutions can help frustrated creditors demand accountability from other businesses that have fallen behind on debts.
