Breach of contract and Bankruptcy

[PGreen01]

Hi all - was hoping to get some advice on the below please:

• I setup a very small part time business supplying commercial catering equipment
• I (very stupidly and naively) took an order to supply some equipment to a customer for his new restaurant on a long term rental basis
• The value of the order is £1,000 + vat for 96 months = £96,000 + vat total contract value
• Unfortunately, the customer has fallen behind with their payments and is refusing to engage or discuss the arrears
• The terms of the agreement mean that they are now in breach of the contract and technically have defaulted
• Technically, they are only 2 months behind - we engaged a debt collector to try and get them to bring the account up to date, but the customer has repeatedly refused to engage with them - they (debt collector) has advised that we should consider court action to enforce full value of contract as it’s in default now etc
• I have made a claim on my legal expenses insurance which is currently being processed - I just want to try and come up with a plan B in case they refuse the claim of assistance etc
• The contract was signed as a sole trader which means no separation between personal and business assets however it appears this person has a history of bad debt (again I fully agree that I have been stupid and should’ve carried out due diligence prior to taking the order)
• Having carried out further research it appears he is currently subject of a bankruptcy order until February 2025 - this isn’t something I was aware of when taking the order
• Having had a look online - bankruptcy restrictions include not being able to have a Ltd company (he is listed as a director for at least one company) and informing any lenders that he has been bankrupt if borrowing more than £500)
• As the value of my rental agreement is significantly more than this - should he not have informed me of this before signing?
• Isn’t he in breach of the bankruptcy restrictions and can I use this information to compel him to pay or is this just straightup blackmail?
• Should I report him and what is the likely consequences for him?

Thanks in advance for any help or advice

[atticus]

Report the breach of bankruptcy laws to the Official Receiver handling his case.

Consider what action you can take to secure and repossess your equipment.

[PGreen01]

Hi - thank you for the reply - in your opinion what do you think the likely consequences for the other party would be re the breach please? (They are circa 70 years old in case that has any bearing on judgements etc)

[atticus]

A fine is the most likely punishment; imprisonment for the more egregious bankruptcy offences (as happened to Boris Becker).

[PGreen01]

Thanks again for the reply Atticus. Any advice about how I can leverage the bankruptcy breaches into recovering my financial losses please?
(Is there any legal way of suggesting they pay what they owe to me otherwise I’ll report them etc?)

thanks

[atticus]

Do you think he'll care?

[Missimaxo]

You can report the acting as a director through the insolvency service website. As above, the breach of obtaining credit should be reported to the official receiver dealing with the bankruptcy. Not all cases are investigated and you may have to act as a witness in any prosecution if they are to try and get one. You could use reporting him as a threat to get your money but if he’s fallen into arrears this quickly I would be more interested in recovering your equipment and mitigating any losses