Insolvency Practitioners and Commercial Disputes – How We Can HelpPosted: Dec 20, 2024

When you are faced with business disagreements over payments, contracts, or other areas such as the management of financial obligations, the first priority is a practical resolution.

As Insolvency Practitioners (IPs), Smart Business Recovery are experienced in navigating such complex situations. Our ultimate aim is achieving practical solutions, securing payments, and where possible, avoiding costly court proceedings.

The Problem with a Commercial Dispute

To state the obvious perhaps, commercial disputes are not an enjoyable experience. In fact, they can be one of the most unpleasant, stressful and financially damaging things that can happen to a business. The people involved are often emotionally charged and personally invested, which means they can become more than a business problem, they can develop into something acrimonious and toxic. They end up not just threatening the financial stability of the businesses involved, but also often the wellbeing of the individuals caught up in the process.

Sadly, many businesspeople take the rocky road of a legal response without asking an IP to get involved and help negotiate an acceptable outcome. Sometimes it can be clear-cut as to where blame lies. However, while it may be satisfying to be the one who will win the case, the commercial and financial fallout of the courtroom and legal route can make it an unwelcome victory. It’s not uncommon that both companies need to both go through a series of costly legal advice sessions, the dispute drags on for months (even years), then when it eventually goes to court, the losing party often goes out of business and the claimant ends up with pennies on the pound at best.

Nobody really wins and often everyone loses to a greater or lesser extent.

What Can an IP Do to Resolve Disputes?

As you may know, Insolvency Practitioners are licensed professionals authorised to advise and manage businesses or individuals with financial issues. Our expertise encompasses various financial and legal aspects, making us particularly effective in resolving commercial disputes. We will act as a mediator and advisor to create the most beneficial resolutions for all parties.

Every case is different, so how we respond will vary based on what is needed, but we will always start by breaking things down to the facts. Getting to the basic facts both defines the problem and also does something very important when it comes to getting the best resolution. It takes the heat out of the situation and gives everyone some common ground to work from. We are looking to define the financial position of all parties involved, evaluate the terms of the contract, agreement, or other issue if that is important, and then identify the root cause of the disagreement. This holistic understanding is then used so that any proposed solution is based on accurate financial, and crucially, legal grounds.

Much of what we will do during a dispute situation will result in legally binding outcomes. We are doing more than just talking, we are also laying out a solid legal framework for everyone.

Once the situation is clear and everyone knows exactly where they stand, we can all start working towards a reasonable outcome.

Mediation and Negotiation

Once we know where we are, we will begin facilitating discussions between the disputing parties. With the facts now available, we will be aiming to bridge gaps in communication, reduce emotional tensions, and focus all parties on finding a viable solution. When we are all working this way the chance of the conflict escalating again is considerably reduced. It’s about getting everyone talking with an agreed focus so we can move on to practical solutions.

Payment Plans

Where non-payment is the issue, we can look to negotiate structured payment plans that satisfy creditors while providing debtors with manageable terms. Payment plans can play a big role in ensuring an outcome where losses are minimised and even avoided entirely on both sides.

Contract Renegotiation

If the dispute stems from contractual disagreements, an IP can help draft revised terms acceptable to both sides. This can not only solve the dispute but may even result in the recommencement of working relationships between the businesses.

Debt Restructuring

In cases where financial problems are a part of the reason for the dispute, but there is still a viable company to deal with, we may propose restructuring solutions. This could involve, for example, consolidating debts, extending repayment timelines, or arranging for partial settlements. That way creditors receive at least some payment rather than risking total non-payment.

Avoiding Court Where We Can

Court proceedings are costly and time-consuming so we would rather resolve a dispute amicably and in a way that means all parties reach a practical, realistic, resolution. We aim to preserve relationships, ensure payment, and resolve the dispute without resorting to the courts.

At the end of the day, there is more to be gained by focusing on collaboration and financial realism, than any other route. That is what we are here for when it comes to commercial disputes. We create a structured approach to negotiation. That approach enables us to deliver practical solutions by focusing on payment arrangements that work for everyone.

The sooner things are settled, the faster you and your business will regain continuity and recover from the financial and emotional issues that a dispute often raises.

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