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Avoid Unjustified Claims From Borrowers


The latest tip from our Receivership team


We have had a number of cases recently where borrowers have tried to pursue unjustified claims against receivers for losses arising from possession.

As we are finding that possession proceedings and enforcements are speeding up following the Covid moratorium, it seems likely that borrowers or their lawyers may try to instigate such claims as a weapon in resisting lenders.



In one case involving a prime flat worth many millions in Central London, we were appointed after possession had been taken following proceedings. 

The borrower refinanced within 24 hours, during which time the keys were delivered to us by a messenger from the High Court Enforcement Officers.

Because we knew that a refinance was imminent, we agreed with the lender that it would be inappropriate for us to incur costs in taking action too quickly.

The keys were returned to the borrower within a day, again by messenger.  In the interim, they remained in the original envelope. This didn't prevent the borrower from making a claim that items had been removed from the flat.

We subsequently found out that the same borrower is claiming against another receiver alleging the theft of many millions of pounds worth of goods that had been stored in a domestic garage!

In another case, following the repossession of an office building, the borrower claimed that high-value historic airplane parts had been disposed of as "junk" rather than sold.  Fortunately, we had seen the potential for such a claim and sought advice from a specialist plant and machinery expert, so we could rely on his evidence that there was no intrinsic value in what he described as "junk mechanical parts".

It's all about risk minimisation.



Some lenders appoint us once they have possession. We appreciate the need to minimise cost, especially where there's risk of a shortfall. However, appointing us immediately before the repossession allows us to put in place arrangements for security or proper collection of goods by the borrower, with photography, inventories etc., and makes a baseless claim far less likely.

If you have any questions about this or other solutions for debt recovery, please get in touch, I am always happy to help.