Company Insolvent

[blueskyone]

Hi,

I am the director & shareholder of a company I have managed for the last 14 years. Unfortunately, due to customers not paying and generally dire trading conditions I believe the company is now insolvent.

I have read through these forums and the best advice I can see for winding up is to a) cease trading and b) write to our creditors informing them of the position and invite them appoint a receiver (which could take months to fully wind up). However, I have today spoken to an IP who informed me that my employee who has been with the company for 14 years will not get payed his stat. redundancy via the government NIS service (the company has no money to pay) unless the company has been completely closed down i.e. not just ceased trading. Can someone please confirm if this is correct?

Thanks

 

[Spongebob]

Normally in this situation one of the main creditors will be HMRC and their policy is to issue winding up petitions to debtor companies who have ceased trading.

Once the company is wound up and in the hands of the Official Receiver your employee will be able to make a claim on the government's redundancy fund.

 

[lovingthesurf]

hi , sorry to hear , although consider it a brand new fresh start .
Your employee will get their redundancy pay through the Government Redundancy funds and they are pretty quick also , around 2-4 weeks .
It is also worth putting a claim in for yourself ( if you are director ) , if you have not been paid for several weeks/months and have been on the payroll .
I know for a fact that directors have been paid in the past through this scheme.

 

[blueskyone]

Normally in this situation one of the main creditors will be HMRC and their policy is to issue winding up petitions to debtor companies who have ceased trading.

Once the company is wound up and in the hands of the Official Receiver your employee will be able to make a claim on the government's redundancy fund.

Thanks Spongebob, according to the IP because our debts are low with HMRC (around £1500) they may take a long time to wind up the company. I would feel extra bad for my employee if it takes a long time for them to get their money from the government scheme ....
Is it true that the company has to be fully dissolved before the goverment redundancy pay scheme with pay out?

Thanks again

 

[lovingthesurf]

Is it true that the company has to be fully dissolved before the goverment redundancy pay scheme with pay out?

Thanks again

If you go through an IP to wind up , the payment to your staff will approx 3 weeks after creditors meeting , not sure what the time is for doing it yourself.
But be assured they will get it .
It is great that you are looking after your long standing employee like this , but you must remember you have to look after yourself as well and move on.

 

[blueskyone]

If you go through an IP to wind up , the payment to your staff will approx 3 weeks after creditors meeting , not sure what the time is for doing it yourself.
But be assured they will get it .
It is great that you are looking after your long standing employee like this , but you must remember you have to look after yourself as well and move on.

Thanks, it looks like for companies that are not wound up (or waiting for the official receiver to be appointed) employees can apply in the meantime for their payments via an Employment Tribunal Case - I am told this will take 2-3 months but will get them the payments.

Thanks again for you help - I am working on the letters to formlise everything and have decided to not appoint an IP as there will not be enough money left to formally close the company anyway.

 

[stuckinarut]

Excuse my late arrival to this. I'm in a situation that appears to be the same as Blueskyone's. My company's making a profit and I'd be making a living if I didn't have 2 longstanding employees. I can't afford to make them redundant and my only option appears to be to cease trading (will probably then continue as a soletrader afterwards on my own):-

Blueskyone - has this all happened and how did it go? How quickly did employee get their money? Did you discuss anything with them about the cease trading before you ceased trading? How painful was it for you in handling the insolvency side afterwards?

 

[Alan R Price]

Excuse my late arrival to this. I'm in a situation that appears to be the same as Blueskyone's. My company's making a profit and I'd be making a living if I didn't have 2 longstanding employees. I can't afford to make them redundant and my only option appears to be to cease trading (will probably then continue as a soletrader afterwards on my own):-

Blueskyone - has this all happened and how did it go? How quickly did employee get their money? Did you discuss anything with them about the cease trading before you ceased trading? How painful was it for you in handling the insolvency side afterwards?

The Redundancy Payments Office has a scheme whereby it will make an unsecured loan to a business that cannot afford to pay its employees' redundancy entitlements if the business can demonstrate that this will save other jobs and that it will be able to afford to repay the loan. Click on this link to have a look at the article I wrote on this subject a while ago.

 

[Spongebob]

The Redundancy Payments Office has a scheme whereby it will make an unsecured loan to a business that cannot afford to pay its employees' redundancy entitlements if the business can demonstrate that this will save other jobs and that it will be able to afford to repay the loan. Click on this link to have a look at the article I wrote on this subject a while ago.

Good Lord!

An outbreak of common sense in a Government agency!