Defending Proceedings Brought against a Business

An example with a negative outcome was where a business owner was sued for the non payment of a debt that was owed for the supply of materials required for the business. The business was a large company that manufactured bull bars and supplied them to multiple different truck companies to sell with their vehicles. The business owner owed money to a number of suppliers of the material that was used to make the bull bars to the sum of approximately $500,000.00. Rather than address the creditor the business owner simply put his head in the sand and did not want to deal with the issue as a result of cash flow issues. As the business owner did not seek advice at any time, he received a number of demand letters, and he even allowed proceedings to be commenced and nothing was done. It was only after judgement was obtained and enforcement proceedings were commenced (in this case it was an application to wind up the company that operated the business) did the business owner seek legal advice. The advice was the same as it would have been in the beginning: come to an arrangement to pay the debt and it will save the business from folding as a result of this debt. The creditor agreed to a reasonable payment plan which allowed the business owner to keep on trading out, pay the debt and also continue to receive materials from the supplier. Had he not taken these steps, the business would have folded. Coming to a late settlement meant that his debt was much higher (as it included costs and interest). The same payment option was open to the business owner from the beginning but, as he did not communicate with the other party at all, that decision cost him dearly.