What Can Bailiffs Take From A Limited Company In Debt?
April 12, 2024
For a company in debt threatened with an enforcement notice, it’s important to explore the different viable business recovery options but you may want to know, what can bailiffs take?
If your business is in debt and creditors are trying to reclaim their money, this is a tough period that requires careful navigation.
Where possible, taking steps to reach an agreement with creditors long before they successfully appoint bailiffs is highly advisable.
Note that bailiffs, also known as enforcement officers, are not the same thing as debt collectors – they have different legal powers in terms of how they can seek repayment. We’ll cover the key differences now.
The role of bailiffs
When creditors try to reclaim the money you owe, they may apply for a county court judgement (CCJ). If you don’t pay that, then creditors may go to the courts seeking a warrant of control or a high court writ.
Unless you successfully apply for a stay of execution, temporarily suspending the CCJ, then you should receive an enforcement notice. This means you have seven ‘clear’ days (i.e. excluding Sundays and bank holidays) to repay the debt before bailiffs will visit.
In contrast to private debt collection, to learn more about the process for HMRC debt collection and management, here is our expert guide.
Bailiffs are aiming to recover the debt. The preference is for you to make a repayment plan when they first visit, so that they don’t have to organise the seizing and selling of assets.
However, if no repayment plan is forthcoming then the bailiffs have no other choice but to make a list of items to take and plan to sell them at auction, reclaiming the debt.
If a bailiff visits, always ask to see their identification – here are your rights regarding bailiffs, including how to verify their certification.
Some creditors may use debt collectors instead of bailiffs. Courts do not appoint debt collectors and therefore, the action they can take is limited – debt collectors cannot take anything from a property.
Some debt collectors may describe themselves as bailiffs, so it’s important to ask for their identification and check it in this scenario.
Can a bailiff force entry to business premises?
Leaving aside limited companies in debt for a moment… When bailiffs visit an individual in debt at their home, bailiffs are not allowed to force their way in.
Exceptions include if the individual has previously let them in or the bailiffs have already taken control of the goods. Also, if the individual has broken an agreement with the bailiff.
But when it comes to business premises, there are some circumstances allowing bailiffs to force an entry, the first time of asking. These include when a court grants the bailiffs permission to do so.
What can a bailiff take from your business?
Assets a bailiff can take from businesses tend to fall into five categories:
- Office equipment: Computers, printers, scanners, photocopiers and other electronic devices
- Company vehicles: Cars, vans, trucks and other vehicles the company owns
- Stock: Goods, raw materials, and work in progress items
- Machinery: Manufacturing and production equipment
- Money: Cash on the premises and other negotiable instruments
There are also some business assets that bailiffs cannot take:
- Any goods you have leased or that are on a hire purchase agreement
- Property you are renting
- Items the company doesn’t own (with evidence)
- Assets essential to the business – tools up to the value of £1,350
- Vehicles displaying a disabled badge
A limited liability company protects directors from losing their personal assets when bailiffs visit to collect a debt.
So for example if you’re wondering, “can bailiffs take my car if I need it for work?” If it’s a company car, yes, but if it has a disabled badge, no – and if it’s your personal car, no.
Other options to pay your debt
Keep in mind that there are three ways to check when a company is insolvent, affecting its ability to pay debts on time. These are the cash flow, balance sheet and legal action tests.
Experts can try one of several business recovery options, so seek advice immediately from an insolvency practitioner.
Possible next steps include going into administration – here’s what happens when a company goes into administration. Other options include a company voluntary arrangement (CVA) or a creditors voluntary liquidation (CVL).
So, what’s the difference between a CVL and a CVA? Usually, a CVL requires that the company stops trading, while a CVA allows business to continue with the directors remaining in charge.
Final thoughts: What Do Bailiffs Take From A Limited Company In Debt?
As mentioned earlier, when bailiffs visit to collect a debt, the limited liability company structure protects directors from losing personal assets.
However, there’s an exception, which is if any directors have signed personal guarantees. A personal guarantee is a legally-binding commitment for the company director ro repay the business loan or settle a debt.
And if you’re wondering, “what happens if I have nothing for bailiffs to take?” Creditors will likely explore other options to reclaim the debt, so legal proceedings will continue.
Long before creditors summon the bailiffs, insolvent businesses should aim to negotiate a repayment plan, seeking help from an experienced and licensed insolvency practitioner.
If your business needs support, please contact us to find out how we can help you.
