Commercial contract / Bankruptcy

[Diamondsharp]

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

If the equipment is rented to him, can it be easily returned?

Send a van and some burly chaps to collect the goods. They are only rented, he doesn't own them. They belong to you so you are completely within your rights to get them back.

When did he enter into the rental agreement with you? Before or after he went bankrupt?

If the agreement predates the bankruptcy order, the debt is part of the bankruptcynand you're a creditor. If he declared bankruptcy and then took out the agreement, he remains liable and possibly in breach of the bankruptcy restrictions.

Depending on the terms of the agreement, you might be able to recover/repossess the item, as you might retain the title. Is there an insolvency clause in the agreement?