News Article

Debt Collection

How quickly does the creditor receive payment?

By CreditMan Wednesday, July 14, 2010

By David Carter of The Sheriffs Office

When the execution of a writ of FiFa (fieri facias) is successful, the High Court Enforcement Officer (HCEO) will have either been given the outstanding money owed by the judgment debtor, or they will have seized goods and sold them at public auction or by private treaty to raise the necessary amount.

In either case, the HCEO will retain the money recovered “in suspense”, i.e. neither belonging to the creditor or debtor, for 14 days before payment is made to the creditor.

Many HCEOs retain this money is a separate client account. This is not a legal requirement, but is good practice. Wherever the money is held, it must be instantly accessible.

The 14 day retention of the money recovered is stipulated in the Insolvency Act 1986 and the Enterprise Act 2004. If a winding up order is issued against a limited company or a bankruptcy petition against an individual or partnership during this 14 day period, then the money recovered is returned to the Liquidator or Official Receiver for the payment of all creditors, not just the judgment creditor. However, the judgment creditor can apply to the court to have the liquidator’s rights set aside in the creditor’s favour.

This ruling does not apply to an Interim Administration Order.

If the goods have been sold, the official receiver or trustee of the bankrupt’s estate has no right to reclaim them from the purchaser who acquired them in good faith from the sale organised by the HCEO.

Once the 14 day period is complete, and no winding up order or bankruptcy petition has been issued, the money is no longer “in suspense” and is paid to the judgment creditor.

Disclaimer: The statements and opinions expressed in this article are those of the author and do not necessarily reflect those of Sheriffs High Court Enforcement Ltd, trading as The Sheriffs Office. Sheriffs High Court Enforcement Ltd does not take any responsibility for the views of the author. The author will not be held responsible for any comments posted by visitors to this site.

Please note that this article does not constitute legal advice. The author has used his best endeavours to make this article as accurate and complete as possible, but requests that the reader be aware that the law of England and Wales frequently changes. The author strongly advises the reader to take legal advice before embarking on any enforcement action.