How to Handle Unpaid Debts from Another Business?

As a business owner in Singapore, one of the most frustrating experiences you may face is when a platform or company owes you money, but you’re unable to recover it. Whether it’s due to slow payments or non-payment for delivered products, small business owners often find themselves in a challenging position. Here’s a step-by-step guide to navigating the Small Claims Tribunal process, and what to do if the company you’re pursuing has wound up.

1. The Problem: Unpaid Debts and No Protection for Sellers

The main issue faced by many business owners, particularly when dealing with e-commerce platforms like Q10, is that while consumers are protected by laws and platforms have measures to resolve disputes in favor of buyers, sellers are often left vulnerable. Sellers may find themselves owed thousands of dollars for products they’ve delivered, but with little recourse to recover those funds. This creates an imbalance that can significantly harm small businesses.

In cases where a platform or company owes you money and refuses to pay, or if they are no longer operational, the legal process can be both frustrating and time-consuming. The Small Claims Tribunal (SCT) is a potential avenue, but there are important steps to follow to ensure you have the best chance of recovery.

2. What to Do: Steps for Pursuing Small Claims

If you’re facing unpaid debts, filing a claim with the Small Claims Tribunal might be your first step. Here’s a detailed guide on how to do that:

Step 1: Gather Documentation

Before you file a claim, it’s essential to collect all the necessary documents and evidence. This includes:

Invoices or proof of payment: Any invoices you issued for the products or services delivered.
Communication records: Emails, chat logs, or messages with the company or platform regarding the unpaid debt.
Proof of delivery: Shipment receipts, tracking numbers, or any documents that prove you fulfilled your part of the transaction.
Contracts or agreements: If you have any written agreements with the company, ensure you have them available.

Step 2: Check Your Eligibility

The Small Claims Tribunal typically deals with claims under $10,000 (or up to $20,000 in specific cases if both parties agree to it). You can only file a claim against individuals or companies within Singapore. The SCT can help you with disputes related to money owed for products or services, so make sure your claim falls under these categories.

Step 3: File the Claim

Once you have all your documents in order, you can file your claim with the Small Claims Tribunal. Here’s how:

Online Application: You can file your claim online through the official Singapore Government website. You’ll need to create an account and fill out a claim form, providing details of the dispute.
In-person Filing: If you prefer, you can also file in person at the Tribunal. Bring along all necessary documents and information.
Fee: There is a filing fee, which depends on the amount of your claim (usually between $10 to $20). If your claim is more than $10,000, you’ll need to use other legal channels.

Step 4: Tribunal Hearing

After filing your claim, the Tribunal will schedule a hearing. It will take up to 3 months for you to get your hearing date. You’ll be required to present your case before a Tribunal officer. During the hearing:

Be clear and concise about the amount owed and the circumstances of the dispute.
Provide all the documents and evidence to support your case.
If the other party does not show up, the Tribunal may proceed with a default judgment in your favor.

If the Tribunal rules in your favor, the other party will be ordered to pay the amount owed. However, collecting the debt after a judgment can still be a challenge.

Step 5: Enforcement of Judgment

If the other party refuses to pay even after a judgment is made, you may need to take additional steps to enforce the judgment:

Garnishment of wages: The Tribunal can order the defendant’s wages to be garnished to pay the debt.
Seizure of property: In some cases, you can apply to seize the defendant’s property to recover the amount owed.
Other enforcement options: The Tribunal may advise other legal enforcement actions, such as a writ of execution.

3. What Happens If the Other Party Has Wound Up?

One of the most frustrating scenarios for business owners is when the company or platform they are trying to claim money from has ceased operations or has “wound up.” This means the company is no longer in business, which can make it nearly impossible to recover any funds owed.

If the other party has wound up, here’s what you can do:

Step 1: Verify the Company’s Status

You need to confirm whether the company is truly dissolved or wound up. To do this, check:

The Accounting and Corporate Regulatory Authority (ACRA): You can search the ACRA database to check if the company is still active or if it has been struck off.
Public records: If the company is in liquidation, there may be public records or announcements regarding its liquidation proceedings.

Step 2: Assess Available Assets

If the company has been wound up, there may still be some assets left for creditors (you) to claim. The process of recovering funds from a company in liquidation is complex and typically involves:

Liquidator’s role: When a company is in liquidation, a liquidator is appointed to handle the distribution of the company’s assets. You will need to contact the liquidator and submit your claim.
Debt recovery: Depending on the company’s financial situation, there may be a chance to recover a portion of the debt. However, it’s unlikely that you will recover the full amount owed, especially if there are many other creditors.

Step 3: Explore Alternative Recovery Methods

If the company is no longer operational, there may still be ways to recover your money, but these methods may require significant time and effort. Some options include:

Pursuing personal assets: If the company’s directors or owners are personally liable (for example, if they gave personal guarantees), you might be able to pursue their personal assets.
Negotiating with suppliers or couriers: If the company was using third-party services (like a courier), and there are still funds owed to them, it may be possible to negotiate a settlement or find an alternative avenue for recovery.

Step 4: Consider Legal Action Against Individuals

If the company has dissolved but you believe there’s still a way to recover funds through the company’s directors or other responsible parties, you may need to consider taking legal action against them personally. Consult with a lawyer to understand if this is a viable option.

Conclusion: Navigating the Challenges of Unpaid Debts

Recovering unpaid debts from a company or platform can be an uphill battle, but by understanding the process of Small Claims Tribunal and knowing what steps to take if the other party has wound up, you can better protect your business and pursue your right to payment.

While the process may be time-consuming and occasionally disappointing, being informed and prepared is crucial. Whether you’re going through the Small Claims process or dealing with a company that has ceased operations, you’ll need patience and persistence to recover what is rightfully owed to you.

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