Chapter 10:The dreaded section 364

The dreaded section 364

ONE WAY to get immediate attention from a company that owes you money is to threaten to wind it up. If a company owes you more than $1000, you can do this. It doesn't matter how big the company is. It's easy -- and cheap -- using section 364 of the Companies Code.

If you know how to word it, there's nothing to stop you from doing it yourself. You simply write out the message, march up to the company's office, and stick it to their door with Blu-tack or four drawing pins. If they don't pay up in 21 days, you'll wind up the company. No matter if they own half the State, and they only owe you $1000.21.

In practice, because the wording needs to be right, you need a lawyer to do it for you. But it's simple enough, so it doesn't cost much.

Debt collectors use this tactic sometimes. But they always send an ordinary summons too. Boom, boom, two barrels: a summons, and a section 364. Because the debtor might defend the 364 and it could collapse unless you already have a judgment. So to speed things up, you move toward judgment at the same time you issue the 364.

Another problem: it's expensive to use the 364 (rather than just issue it). It might cost $2000 or more to get to the point of appointing a liquidator. And then the liquidator will put out his hand and want a few thousand up front before he'll do anything. (Who could blame him?)

But the point is, you can just let the 364 hang there. The company doesn't know if you mean it or not. Believe me, there are lots of angry creditors out there who do uneconomic things just for vengeance. The company you're after can't be completely sure you aren't a lunatic. You might actually wind them up! Uneasy lies the head that wears a corporate crown -- if there's a 364 in the in-tray.

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