Advocate has successfully recovered £35K from a failing West Midlands pharmacy group before it entered liquidation two months later. The business depended on using relief locums to ensure its flagship store could fulfil NHS prescriptions. A WhatsApp group for locum pharmacists in the area lit up when one member complained they had been waiting two months for payment and urged fellow professionals not to work for the company. This prompted four pharmacists to submit their cases to Advocate, ensuring we commenced action at the same time with the same urgency. Between them, our four clients were owed a total of £35K overdue by up to eight months.
Looking at the pharmacy group’s latest set of accounts, it was immediately clear to Advocate they were trading insolvent. Having haemorrhaged money for three years and accumulated losses of over £5M, the business was destined to fail. Liquidators would later attribute the insolvency to acquiring other sites without having sufficient cashflow to meet the debt repayments. Our four pharmacists were sole traders with mortgages to pay and families to support; they could not afford to write off debts of £3K, £5K, £10K and £17K. In a coordinated effort, Advocate issued four Notices of Insolvency Proceedings, synchronising the timing to ensure each debt was made an equal priority for the failing pharmacy. Had our action been unsuccessful, the pharmacists would have shared the cost of filing a Winding Up Petition.
Prescribing Payment
For the £3K debt, the pharmacy’s sole director counterclaimed two months of earnings as a termination fee because the locum was refusing to accept more work. This would have left her indebted to the pharmacy! We invited the debtor to highlight the contract clauses to support the claim, knowing full well it did not contain a termination fee. The director promptly stopped contesting the debt. As a result, payment of the £3K plus statutory late payment charges was received on the fourth day of our action.
For the £5K debt, a payment plan lasting four months was demanded by the debtor and calmly refused by Advocate. There was no guarantee the pharmacy would still be trading in four weeks let alone four months! As a result, payment of the £5K plus statutory late payment charges was received on the sixth day of our action.
For the £10K debt, the debtor again claimed termination fees were payable and again Advocate confirmed no such clause existed in the locum’s contract. An offer of payment conditional on receiving NHS funding in two months’ time was declined by Advocate. As a result, payment of the £10K plus statutory late payment charges was received on the fifth day of our action.
For the £17K debt, a spurious dispute was raised regarding timesheets differing to the invoiced sums. Having reviewed the timesheets ourselves and comparing them to the invoicing, we reiterated the amounts claimed were correct and must be paid. As a result, payment of the £17K plus statutory late payment charges was received on the third day of our action.
This £35K debt recovery is a prime example of what can be done when creditors take action before it is too late.