What are bailiffs’ powers with limited companies in debt?
A limited company stands as a distinct legal entity from its director, meaning that if a bailiff or enforcement officer is appointed, only possessions owned by the company can be repossessed.
When bailiffs are tasked with collecting a debt on behalf of a creditor, and negotiations have faltered, they may visit your premises to seize goods.
As a company director, facing such a situation can be incredibly stressful. However, understanding the authority and power held by bailiffs allows you to maintain some control in a potentially volatile scenario. Seeking professional advice on your company’s financial position well before bailiffs are involved is recommended.
Who are bailiffs?
Bailiffs also referred to as enforcement agents, may operate for the courts, be self-employed, or work for private bailiff companies. In cases of debt owed to HMRC, they can be appointed without a court order, expediting the enforcement process.
It’s important to note that debt collectors differ from bailiffs. Debt collectors lack specific powers of entry or seizure of goods, although some may falsely claim such authority.
What is the role of a bailiff?
When dealing with limited companies in debt, a bailiff’s initial responsibility is to negotiate a repayment agreement with the debtor. If unsuccessful, their next step is to visit business premises to seize goods equivalent to the debt’s value.
To execute this legally, the bailiff must be certificated, indicating they have undergone a CRB check and deposited a £10,000 security with the court. This security also called a bond, safeguards all parties in case the bailiff absconds with any repaid funds.
Can Bailiffs Conduct Unannounced Visits or Use Forced Entry?
You should receive a seven-day notice of a bailiff visit in the form of an enforcement notice. Typically occurring between 6 am and 9 pm, a bailiff visit could happen on any day of the week.
Upon their arrival, ensure the bailiffs have proper identification and certification, granting them the legal authority to seize goods if required. The initial visit typically involves listing business assets for potential seizure, serving as an encouragement for debtors to repay without the actual removal of goods.
There are specific situations where bailiffs can forcibly enter your business premises if they haven’t been there before:
- When a court has granted permission for bailiffs to enter, such as on behalf of HMRC.
- Involvement of High Court Enforcement Officers or bailiffs from the County Court.
What are the powers of seizure?
Operating as a limited company offers the benefit that, generally, the company is responsible for its debts rather than individual directors. This restricts bailiffs from seizing goods owned by the business unless a personal guarantee for business borrowing has been provided.
On the initial bailiff visit, a list of goods for seizure and auction is compiled. Sometimes, these goods are left on the premises, possibly secured in a separate room.
This process alone might encourage tougher negotiation for an instalment plan, allowing you to retain and use the listed goods by meeting the new arrangement’s terms and conditions and signing a Controlled Goods Agreement.
If no agreement is reached, bailiffs have the right to auction your goods, but they must provide a seven-day notice before doing so.
Read More:
- What can a bailiff legally take from my home or workplace
- Antecedent Transactions – A complete guide for company directors
- Sole Trader Insolvency: What happens to me and my business
- What is a Seized Goods Letter
Consult Professional Guidance Early on
Negotiating an affordable repayment plan is the optimal solution in this challenging situation, ensuring any offers made are reasonable. Missing a single payment may lead to bailiffs seizing and auctioning the listed items.
Seeking professional advice when your company faces debt is wise, offering more options and reducing the risk of swift enforcement actions, especially if HMRC is involved.
If a bailiff visit is imminent and you need guidance on how to proceed, Vanguard Insolvency can provide expert assistance. With extensive experience in such situations, we’ll ensure you know your rights and options.
Contact our expert team for a free initial same-day appointment. We’ll discuss the best approach for your immediate issue and provide support in your interactions with the bailiffs.
I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.