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Debt Recovery against a Company

A debt recovery process can be a straight-forward yet complicated process. While most debt recovery may seem to be a straight-forward claim for the debt owed to you, each debt recovery process is unique to their circumstances and situation. It may, therefore, be prudent to seek legal assistance to be correctly advised before proceeding further.

While there are no specific laws that regulate the debt recovery process in Singapore, there are particular regulations and legal limitation that oversees the debt recovery process in Singapore to ensure that parties had taken all reasonable action before commencing the action in the Singapore court.

Limitation Period

Legally, a debt recovery claim has a “deadline” set out in the Singapore Limitation Act. In most circumstances, a debt recovery claim must be made within six (6) years from the date when the debt is accrued to ensure fairness to all the parties involved. The main intention of the “deadline” is to ensure the claimants had pursued their action with reasonable diligence, and the respondent may still have the necessary evidence to disprove the claim.

As the question as to when the debt is accrued is a legal one, you may wish to seek legal assistance if you are concerned that the debt accrued to you is “expired”.   

Singapore Court Protocol for Claim from a Company against a Company  

From 1 October 2019 onwards, the Singapore Court had required any action for a business-to-business claim to be done in accordance with the pre-action protocol set out by the Singapore Court. You may, therefore, wish to seek legal advice and legal assistance to assist in the preparation of your letter of claim if the matter is a debt recovery against a Company by a Company.

The pre-action protocol set out the requirement necessary for the letter of claim to include all the pertinent details of the claim, including:

  •  The name of the creditor;
  • The amount of the debt;
  • The interest applicable;
  • How the debt arise; and
  • The measures taken by the parties in resolving the debt owed.

While the breach of the pre-action protocol may not defeat the entirety of the debt recovery claim, the Singapore court may punish the party in breach of the pre-action protocol by ordering the payment of costs even if the debtor succeeded in their claim.

Importance of a Lawyer in a Debt Recovery Claim against a Company

A debt recovery claim against a Company may bring forth multiple legal questions as a Company, unlike an individual, cannot speak for itself. A Company may only communicate by way of their representatives, agents and employees. It is, therefore, crucial to seek legal advice on the validity of your debt recovery claim and to ensure proper due diligence had been carried out before the commencement of the legal action.

A lawyer may also assist you in understanding the financial capability of the Company before you commence your action. A lawyer may be able to help you to identify whether the Company is still solvent and whether initiating a legal process is the right way to do so.

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What if the Company is Liquidated?

When a Company is liquidated, the debt recovery claim against the company can be done by way of filing a proof of debt to the liquidator. The evidence of debt can be filed, regardless whether the debt is due on the date of the filing of the proof of debt. Upon the filing of the proof of debt, the liquidator of the Company will examine and verify the debt accrued. The liquidator then can accept the debt recovery claim in its entirety or part or reject the claim.

However, unfortunately, the filing and the acceptance of the proof of debt will not guarantee the payment of the debt to the creditors. The creditors, usually the unsecured creditor will be the last to be paid and will only be paid with what is left of the company’s assets after the distribution had been made to the preferential and secured creditors.

Once the winding-up order had been made and the assets had been distributed, the company will be dissolved, and any debt owed by the Company will be extinguished. 

What are my options to claim against a Company?

Before commencing legal action, you may wish to consider the following options:

Negotiate with the Company Representative;

Sometimes, a negotiation to reach an amicable settlement with the Company debtor may give a more favourable outcome. Try setting out a formal meeting with the aim to negotiate a payment plan and to understand the realistic and viable option available to you to recover your debt. You may also seek a lawyer to draft out a payment plan for you to ensure that your legal rights are protected, and your claim is not extinguished.   

Notify the Company’s Account Department;

In larger companies, the debt owed to you may not have been notified to the right department. Try opening a communication channel with the right department to confirm that your debt is receiving the attention it needs.

Collection Agencies;

You may also seek third parties to assist you in your claim if you do not have the time to pursue it yourself. However, you may wish to ensure that the debt collection process is done legally to ensure that your debt recovery claim is not negatively affected.  

Legal Assistance;

You may seek a lawyer’s assistance to issue a Letter of Claim or a Letter of Demand for you. In the event that your debt is still unrecoverable, you may also wish to consider pursuing by way of legal action in the Singapore Court.  

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Our specialised lawyers and their team are standing by to assist you. Our first consultation is free.

The information contained within this website contains general information about our lawyers, Law Firm and procedures and is not intended to constitute legal advice.
Any person viewing or receiving information from this Website should not act or refrain from acting, on the basis of any such information without first seeking appropriate legal advice.
Please consult a lawyer for specific review of your case and advise. 

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