I’ve invested money but not been repaid- what can I do?
When you invest in businesses or provide personal loans, there is a risk of late repayments, default, or failure to pay. To navigate these challenges successfully, you need to be aware of your legal rights as well as the different recovery strategies. We consider both legal and practical approaches to recovering loans as shown below. We are a litigation firm that only deals with situations where something went wrong. Helix Law can help you if you have been in a situation that you have not been repaid for a loan or investment. What Options Do You Have to Recover Debts Due To You?
Be careful when dealing with unpaid bills to avoid being unreasonable or patient. You may be losing ground without realising it. While you are trying to reach an agreement, the debtor may be selling assets.
A debtor may claim they are remortgaging to repay you. However, until you know for sure that the remortgage money will be paid to you by your debtor, you risk worsening your situation. While you may be willing to accept delays, there is a six-year limitation period on breach of contract claims. After that, it is very difficult, if possible, to pursue recovery.
For these reasons, and more, it’s important to know your position’s strength and weakness. It’s rare that one size fits all.
Getting the house in order
Before you take any action, it’s important to know where you stand. Review your documents and evidence that supports what you say.
For instance, do you have the loan agreement? Do you know when (date), who (borrower’s name and bank account number) and how much (amount) was lent? When was the money repaid? Has the debtor’s situation changed? Has the debtor communicated directly to you any risks that may be associated with your position? Before you say or do anything, it’s important to know where you stand. This includes understanding the positives and downsides of your position. If it’s been six years since a breach of contract occurred, it may be considered time-barred. However, if the debtor agrees, they can still repay the money.
If the loan agreement is lost or there was never a written contract, it may be wise to confirm the terms and what happened via email or a letter before pursuing recovery. You can then rely on any acknowledgements or admissions made by the debtor. It’s worth doing some research about the borrower. Loans can last for many years, and much can happen in that time. Are assets still owned? What is the financial situation? How you pursue recovery, and how patient you can be, may be heavily influenced by the borrower’s financial position and solvency.
In some situations, there may be a race for assets. In another situation, you might be able to accept a short delay.
Speaking to The Debtor Informally
An initial conversation might be sensible to explore whether this is a mere oversight. It is important to be cautious so that there are no later suggestions of a delay or a variation. If/when brought to their attention, it should prompt engagement – perhaps an apology and repayment. If this is the case, you may be able to put an end to the matter. If not, it may be necessary to take further steps.
Any conversation must be limited to the confirmation of the amount due, repayment methods and calculations. It is also a good idea to confirm what was discussed via a follow-up e-mail so that there are no misunderstandings later. You should make it clear that you have no other option than to escalate the matter if you do not receive repayment. This protects negotiations, and allows parties to try to negotiate in good-faith without fear of appearing to admit anything in front a judge. The parties must agree to refer to the negotiations protected by the without prejudice privilege in court.
Sending A Letter Of Claim
When informal negotiations have failed and your legal and factual positions are clear, you need to escalate the matter. Before filing court proceedings, you must draft and send a detailed claim letter. This must be in accordance with the practice directions governing pre-action behavior, which is part of the civil procedural rules that govern litigations in England and Wales.
When an individual is responsible for the debt, it is important to follow the pre-action protocol for debt recovery. The above steps will protect your position when it comes to recovering your legal fees in due time. Positioning is essential in any litigation or dispute. This is a formal letter which explains and explains your position, including what you claim you are entitled to and why. It’s important to show that you are serious about the matter so that your opponent knows not to take you lightly. The letter must comply with the Civil Procedure Rules. Ensuring the content is technical
Issuing Court Proceedings
If a formal demand letter does not prompt repayment from your debtor, advancing to a claim will be necessary. This is an important stage, and a Particulars of Claim must be prepared that fully explains the dispute. If your claim is successful, the court will order a Judgment in your favour. This will usually include the original debt plus any applicable interest and costs. If your claim is successful, the court will order a Judgment in your favour, which will usually include the original debt plus any applicable interest and costs.
With Judgment in hand, we can then secure the order against assets–usually property–and force the sale of those assets if necessary to recover the monies owed.
Alternative Dispute Resolution
All parties should consider alternatives to litigation at every stage of a dispute. However, it is important to note that disputes do not resolve themselves. There is no magic involved in any process, including alternative dispute settlement. The conditions for settlement are only created when the parties realize that there will be serious consequences for their conduct and behavior if they do not settle. We are experienced litigators and regularly attend mediations with and on behalf of our clients. We are experienced litigators and regularly attend mediations with and on behalf of our clients.
Our head of commercial litigation and Partner/Co-owner, Alex Cook, is an accredited commercial mediator, having trained in this way to better advise our clients on how to position themselves in advance and how to prepare to succeed in obtaining a positive outcome at mediation.
Considering Insolvency
Threatening insolvency can be effective but is a blunt instrument from an investment recovery perspective. It is easy to defend against Statutory demands. A statutory notice is a formal notification from a creditor that if the debtor does not settle the debt, severe legal actions could be taken to declare them insolvent. The warning is sent to both businesses and individuals. It informs them that the creditor intends to initiate bankruptcy or winding-up proceedings for their company. The difficulty for creditors is that these are usually not appropriate if there is a dispute.
Frequently Asked Questions
Can Investors Ask For Their Money Back?
Yes, investors often have the option to reclaim their funds when investments go wrong and debts have not been paid. This is best done directly, formally and quickly, using the content of formal agreements (ideally), such as loan contracts. Need Advice? Contact Helix Law.
