What Can Bailiffs Take from a Limited Company?
If a limited company in the UK fails to pay its debts, it may face a visit from bailiffs. Bailiffs are legally authorized to seize certain assets from the company, such as office equipment, company vehicles, stock, machinery, and money. This can be a stressful situation for business owners, but it is important to understand what bailiffs are allowed to do and what they are not.
This article will delve into the specifics of what bailiffs can and cannot seize from limited companies, as well as the legal constraints they operate under.
What Can Bailiffs Take From Your Company?
Bailiffs can take a wide range of assets from a limited company in the UK, including:
- Office equipment: This includes computers, printers, scanners, fax machines, copiers, and other electronic devices.
- Company vehicles: This includes cars, vans, trucks, buses, and other vehicles owned by the company.
- Stock: This includes finished goods, raw materials, and work in progress.
- Machinery: This includes manufacturing or production equipment, such as CNC machines, lathes, presses, and conveyors.
- Money: This includes cash held on premises, as well as checks and other negotiable instruments.
Bailiffs can also seize assets that belong to the company’s directors or shareholders, but only if they have personally guaranteed the company’s debts.
What Bailiffs Cannot Take from a Company
There are some restrictions on what bailiffs can seize. For example, bailiffs cannot seize:
- Assets essential to the business, such as tools up to the value of £1,350.
- Assets that are leased or on a hire purchase agreement.
- Property which is being rented.
- Items that are not owned by the company (you are likely to need evidence to prove this).
- Vehicles displaying a valid Blue Badge.
What Does a Bailiff Visit Mean for Directors of Limited Companies?
Limited companies are separate legal entities from their directors. This means that, in general, bailiffs can only seize company assets, not personal assets, even if the company is a one-man limited company. However, there are a few exceptions to this rule:
- If the director has signed a personal guarantee for the company’s debts, bailiffs may be able to seize their personal assets.
- Bailiffs may be able to seize the director’s “tools of the trade” if the company is unable to pay its debts. However, this only applies to sole traders and individual partnerships, not to limited companies.
- If the director has acted fraudulently or with reckless disregard for the company’s debts, they may be held personally liable for the company’s debts. In this case, bailiffs may be able to seize their personal assets.
If bailiffs visit a limited company, they will typically seize company assets such as office equipment, stock, and machinery. They may also seize money held on premises.
If you are a director of a limited company and you are facing a visit from bailiffs, it is important to seek professional advice as soon as possible. A solicitor can help you to understand your rights and to protect your assets.
Can a Bailiff Force Entry to My Office?
Unless bailiffs are high court enforcement officers with a warrant signed by a judge, they cannot force entry to your office, ever!
Even court-appointed bailiffs cannot just turn up for the first time and force entry. They are allowed to enter if they have previously entered and drawn up a list of goods to be removed and not otherwise.
What to Expect When Bailiffs Visit a Limited Company
If your limited company in the UK is unable to pay its debts, bailiffs may be sent to collect the money. Bailiffs are enforcement agents who have the power to seize and sell assets to recover debts.
Seizure of assets is not immediate
The bailiff’s first step is to visit your business premises and assess the assets that are available. They will create a “seizure list” of these assets, which you will be asked to sign for. However, this does not mean that your assets will be taken away immediately.
The bailiffs will usually give you time to raise the funds to pay off your debt before they seize and sell your assets. The amount of time you are given will depend on the circumstances of your case, including the size of the debt and your past experience with bailiffs.
Fees and costs
Be aware that any bailiff visit will incur additional fees and costs, which will be added to your debt. These fees can be substantial, and there has been some controversy about their fairness. However, changes to the Tribunals, Courts & Enforcement Act 2007 should help to keep these costs to a minimum.
What to do if bailiffs visit
If bailiffs do visit your business premises, it is important to be calm and cooperative. You should ask to see their warrant and make sure that it is valid. You should also ask them to explain their process and answer any questions you have.
If you are unable to pay the debt in full, you may be able to negotiate a payment plan with the bailiffs. You should also try to negotiate the release of any essential assets.
If you are facing a visit from bailiffs, it is important to seek professional advice as soon as possible. A solicitor can help you to understand your rights and to protect your business.
What Can Bailiffs Take from a Limited Liability Partnership (LLP)?
A limited liability partnership (LLP) operates the same as a normal partnership. However, it is treated the same as a limited company (Ltd) when it comes to seizing assets. What this means in practical terms is that the debts belong to the limited liability partnership and not the partners, who are technically ‘Members’.
The personal assets of a Member/Partner cannot be taken for the limited liability partnership debt unless a personal guarantee has been signed.
Sole Trader Threatened With Bailiff Action
If you are a Sole Trader threatened with bailiff action, there is no difference between personal debts and business debts. In practical terms, this means that the bailiff can take personal assets that are considered non-basic domestic items from your home. These items can be taken as payment/partial payment against what you may have perceived as ‘business debts’.
However, they cannot take things that are considered to be basic domestic items such as a washing machine, furniture, or a cooker. They can also not take things that do not solely belong to the person owing the debt.
What Can Bailiffs Take from a General Partnership?
In general terms, the partnership assets owned by a partnership are to be seized first before taking action against the individual partners’ personal assets. When debts are called in personally unless otherwise stipulated, the debts are treated as being joint and severally owned from the date of becoming a partner. Essentially, this means the creditors will take their money from the partner with the most assets/cash available.