In the latest Podcasts by Brodies series, "What do I do if… I have a good case, but my opponent has no money?", my colleague Craig Watt and I discuss some of the things to think about when you think you have a good claim, but your opponent has little or no assets.
One of the first things we think about, when litigation is contemplated, is the financial viability of your opponent. Most claimants will want some comfort that there are prospects of a recovering at least some of what is owed before embarking on court action. So, what can we do to establish whether your opponent will be able to satisfy any judgement made against them?
What do you know?
The first thing we do is to have a discussion with you. Usually, you will have some form of relationship with the opponent. That might be a personal relationship, or it might be a longstanding business relationship between two companies. It is likely that you will have some useful information about any recent changes to the opponent's circumstances and cash flow. The background to the dispute will also provide context to this analysis. To provide an example, has some unhappiness been intimated about, say, the quality of goods supplied or has the opponent simply gone quiet and stopped paying invoices? Whilst the former might indicate a genuinely held dispute that needs to be resolved, the latter might suggest cashflow and liquidity issues.
In the case of a debtor company, documents publicly available from Companies House will often provide a wealth of information. Sometimes what is not there is as important as what is. A warning that statutory accounts are overdue is a red flag and it is often possible to see patterns emerging over the years, allowing us to consider whether this indicates some financial distress. A large, recent turnover of director appointments might point towards some recent change in the company's circumstances.
It is also possible to check (with reasonable accuracy) if the opponent, whether an individual or a company, owns any property in Scotland. We also carry out a check of the public registers to make sure the opponent hasn't been made bankrupt.
If, after these discussions and checks, there is still some uncertainty, one further option is to instruct tracing agents to carry out investigations. This is a relatively inexpensive, but often very worthwhile, step. The tracing agents will carry out some "desktop" investigations, including searching the edited Voters Roll for information. They will also check whether the debtor has any outstanding court judgments against them and carry out searches to try and ascertain whether or not they are in employment.
Crucially though the tracing agents will usually also physically attend at the opponent's address to glean what information they can. This might include ascertaining the condition of their home/premises, and making discreet enquiries to find out about the opponent's circumstances. The tracing agents will give their views on the prospects of recovery.
What do I do?
The first thing to do if you're concerned that your potential opponent doesn't have any money is to take prompt legal advice and discuss your options with one of our experts. We will talk you through the options to ascertain whether or not your opponent does have assets, and the risks and rewards in taking legal action, all with a view to arriving at a strategy that you are comfortable with that will generate a positive result.