Your Debtor Just Discovered a Pandemic
This video examines how to assess a debtor’s claim that a pandemic, conflict, or other disruption excuses an unpaid invoice. It explains what evidence to request, how to distinguish genuine payment barriers from delaying tactics, and which collection options remain available.
Key takeaways
- Look for a direct connection between the disruption and the inability to pay, rather than general financial or operational difficulty.
- Request supporting records and dates showing when the payment barrier began and when it is expected to end.
- Consider whether the debtor continues to meet other obligations while withholding payment from you.
- Assess the debtor’s willingness to share evidence, communicate, and propose workable arrangements.
- Where the obstacle is genuine, consider instalments, partial recovery, restructuring, or an insolvency claim.
What this video covers
The video teaches creditors how to evaluate force majeure claims without getting drawn into an email debate over legal terminology. It outlines the distinction between civil-law systems, where relevant rules are generally codified, and common-law systems, where the contract must contain a clause covering qualifying events. The central question is whether an external, unforeseeable, unavoidable event directly prevented the debtor from fulfilling the obligation. Increased costs or difficult trading conditions are not the same as impossibility. A disruption that explains a shipping delay does not necessarily explain why an invoice for completed delivery remains unpaid. The recommended response is to ask for records establishing the specific obstacle to payment, together with dates showing its onset and expected resolution. Continued payments to employees, landlords, or other suppliers can undermine an assertion that payment is impossible. The debtor’s response also matters: evidence and practical proposals differ from silence, diversion, or another explanation for delay. The video also recognises genuine barriers, including banking restrictions arising from sanctions and severe damage to a business. In those situations, collection efforts may shift toward negotiated instalments, recovery of part of the balance, restructuring, or filing a claim in insolvency proceedings.
