At Slater Byrne Recoveries Australia, we pride ourselves on delivering structured, persistent, effective, and efficient debt recovery solutions. In one of our recent dealings with a client, we highlight how a comprehensive approach in navigating complex and complicated guarantor-related collections can secure favourable outcomes.
Debt Recovery from Guarantors
Our client who is in the seafood wholesale and distribution industry, was owed a significant amount by a company in food and hospitality in New South Wales. The debt was owed by a company and was personally guaranteed by two individuals, who committed to covering any outstanding financial obligations of the company. With this, our client held the belief that these guarantors would pay the debt in the event the company was unable to pay.
However, despite the signed guarantees, upon chasing the guarantors, no payments were made. Throughout this time, the debt began to accrue interest, increasing the total amount due.
Debt Summary:
- Original Debt: $51,572.48
- Interest Accrued: $4,537.53
- Total Balance Due: $56,110.01
- Debt Period (Debt Incurred): 21 December 2023 – 31 January 2024
Slater Byrne Recoveries Collection Approach: From Initial Demand to Legal Action
Once we were engaged, our first course of action to successfully recover the debt is to issue a demand notice letter to the guarantors reminding them of the debt and setting out their legal obligations under the signed guarantee. This is a strategic first step to encourage voluntary payment and invite communication in a polite and non-threatening way, without escalating any tension between our client and the guarantors. The aim for this is to try to resolve the debt without needing to escalate further.
Unfortunately, in this instance, the debtors ignored our attempts to make contact.
Communication and Transparency with Debtors
The collection team engaged in extensive communication with the debtors. Regular follow ups were made, and full documentation was provided to the debtor.
SMS reminders and further email correspondence were sent after the soft demand letter.
Throughout the process, regular phone calls were also made to request updated statements and discuss payment options.
Eventually, the debtors’ legal representative offered a one-off settlement of $5,000. Given the large debt sum owed this was rejected by our client.
Our client gave clear instructions to pursue the guarantors for the full amount owing.
Legal Enforcement and Court Proceedings
With these instructions the matter was then escalated legally. This includes the drafting and filing of a Statement of Claim.
- A Statement of Claim was filed after the debtors failed to pay the debt sum.
- Both guarantors were served with the claim on 18 November 2024. They are given 28 days within which to make full payment, enter into a payment arrangement, or file a defence. They did nothing and maintained they could only pay $5000.00 to resolve this debt. This was again refused by our client.
On expiry of the 28-day period, a default judgement was obtained from court for the value of $57,208.52 on 21 January 2025 due to no payment being made. This is a court order ordering the debtors to pay the full amount.
The Outcome
Having a default judgment in place, there was still no payment. We then recommended issuing a Bankruptcy Notice to both guarantors to force payment as they were not taking heed of the court’s orders. After this was filed at court and served to the guarantors, they proposed a weekly payment plan of $2,500 but our client rejected this, requesting that the full amount be paid as the guarantors were trading a profitable business and should have the ability to pay in full.
Once they realised their attempts to drag out this case were futile and our client would proceed with the full legal process to force payment, the debtors finally responded favourably and settled by paying the debt in full, including the incurred legal fees and interest.
Why This Case Matters
This case highlights our structured and persistent approach to debt covering, particularly in these areas:
- Experienced and professional negotiation before any legal escalation
- Enforcement of personal guarantee in instances of businesses failing to pay a debt
- Client-first strategy and transparency in communication and reporting
- Effective transition from initial collection to legal action
Slater Byrne Recoveries holds true in their mission that no matter what business or industry you’re in, you deserve protection against unpaid debts.
Are you in a similar situation with unresponsive guarantors and unpaid debts causing cash flow issues? If so, contact our team today for an obligation free chat on how we might be able to help.
