Insolvency and Poor Health

[CAAH17]

Hi everyone,

My business has evidently became insolvent. My mental health is extremely poor. I also have been diagnosed with autism in the past year. I'm now preparing to close up shop pretty much immediately. The company cannot pay its debts.

I have no money for solicitors and no support. My company owes around 50k total to various creditors. I'm a sole director and I have a separate shareholder on board (my ex).

It's too long winded to express in this post but my only option is compulsory liquidation through the courts. My ex has refused to allow the company to liquidate through a CVL and I needed him to vote for it to legally proceed.

I just don't know if I can face what's coming. My mental health is poor and deteriorating and being autistic really makes things difficult when it comes to reading through legislation and trying to sort this.

I have 14 members of staff and they all need their redundancies so I cannot do the spongebob plan. My ex doesn't much care about making things difficult for them to get their redundancies but is enjoying making things more difficult for me unfortunately.

Does anyone have any advice for a Director with autism, deteriorating mental health and navigating the courts and official reciever interviews without a solicitor? He will likely try to muddy this up as much as he can at hearings and continue to oppose the business closing down wherever he can. Im expecting wild accusations when my conduct is investigated. Ill be able to quash anything regarding my conduct but i dont know if I can face the fight of it all. The thought of seeing him at hearings which I've read he is able to be heard at is making me incredibly anxious and I haven't even applied to the courts yet. I just don't think I can do it.

Is my mental health something I should make the court aware of or will this likely make things worse for me regarding director capacity?

Sorry I know this is a lot. Thank you for taking the time to read. Some information may be vague but I can't provide much more as I'm genuinely worried about him seeing this. I hope that is okay.

 

[Frank Wessely]

Hi everyone,

My business has evidently became insolvent. My mental health is extremely poor. I also have been diagnosed with autism in the past year. I'm now preparing to close up shop pretty much immediately. The company cannot pay its debts.

I have no money for solicitors and no support. My company owes around 50k total to various creditors. I'm a sole director and I have a separate shareholder on board (my ex).

It's too long winded to express in this post but my only option is compulsory liquidation through the courts. My ex has refused to allow the company to liquidate through a CVL and I needed him to vote for it to legally proceed.

I just don't know if I can face what's coming. My mental health is poor and deteriorating and being autistic really makes things difficult when it comes to reading through legislation and trying to sort this.

I have 14 members of staff and they all need their redundancies so I cannot do the spongebob plan. My ex doesn't much care about making things difficult for them to get their redundancies but is enjoying making things more difficult for me unfortunately.

Does anyone have any advice for a Director with autism, deteriorating mental health and navigating the courts and official reciever interviews without a solicitor? He will likely try to muddy this up as much as he can at hearings and continue to oppose the business closing down wherever he can. Im expecting wild accusations when my conduct is investigated. Ill be able to quash anything regarding my conduct but i dont know if I can face the fight of it all. The thought of seeing him at hearings which I've read he is able to be heard at is making me incredibly anxious and I haven't even applied to the courts yet. I just don't think I can do it.

Is my mental health something I should make the court aware of or will this likely make things worse for me regarding director capacity?

Sorry I know this is a lot. Thank you for taking the time to read. Some information may be vague but I can't provide much more as I'm genuinely worried about him seeing this. I hope that is okay.

HI CAAH17

I'm sorry to read about the business and personal challenges that you are facing.

Does the company have any assets? I assumed not from your narrative. If your co shareholder had agreed to wind up the company via a CVL how would you have paid the IPs fees?

In a nutshell as things stand, I see that your options are:-

1. Invite your larger company creditors to present the winding up petition themselves. One of them might be willing although if there is no likely dividend for the creditors I do not see there being any appetite to do so.

2. If your 14 staff would be able to contribute about £350 each that could collectively cover the legal costs of a winding up petition. Then with the resultant winding up order in place they would be able to make claims against the Government redundancy fund for contractual amounts due to them. Also, the costs of the petition would be repaid as a priority expense from the insolvent Estate if there are any assets to be realised.

You would not need to make any representation to the Court directly. However I would suggest that you should make the Official Receiver aware of the medical issues, ideally supported by written evidence from your GP. You do not require a lawyer to accompany you to these interviews; taking a friend who has a common sense approach to bureaucracy should suffice.

I hope that this is helpful.

Thanks.

 

[JEREMY HAWKE]

Some people will advise you on here to follow the Spongebob plan but your operation looks to be too big for that. So I would not spend too much time on looking at that when the ideas come in
Good advice from @Frank Wessely

 

[Gyumri]

I would no nothing in this situation because there is nothing that needs to be done beyond apologising perhaps to creditors and staff as a result of the company going under.
That's not the same however as robbing a bank and plenty of companies are in difficulties.

As for asking the employees to contribute money towards the costs of winding up the company as creditors I can't see that being a good idea at all and may surely deprive them of their entitlement to statutory redundancy as well as asking them to lose £350 for nothing.

So there is nothing that can be done as a director as far as I can see. If some clever busybody with money to burn wants to do you a favour by winding up the company then I would at least buy him a drink.

Your worries with the demise of the company are all history - they're not in front of you unless you have personally guaranteed the companies debts.

 

[kulture]

I would recommend that you follow Frank’s advice as he knows what he is talking about. I would definitely not recommend doing nothing.

 

[JEREMY HAWKE]

Doing nothing is OKish if your business has no responsibilities ie employees

 

[Frank Wessely]

I would no nothing in this situation because there is nothing that needs to be done beyond apologising perhaps to creditors and staff as a result of the company going under.















That's not the same however as robbing a bank and plenty of companies are in difficulties.































As for asking the employees to contribute money towards the costs of winding up the company as creditors I can't see that being a good idea at all and may surely deprive them of their entitlement to statutory redundancy as well as asking them to lose £350 for nothing.



So there is nothing that can be done as a director as far as I can see. If some clever busybody with money to burn wants to do you a favour by winding up the company then I would at least buy him a drink.



Your worries with the demise of the company are all history - they're not in front of you unless you have personaly guaranteed the companies debts.

I would no nothing in this situation because there is nothing that needs to be done beyond apologising perhaps to creditors and staff as a result of the company going under.
That's not the same however as robbing a bank and plenty of companies are in difficulties.

As for asking the employees to contribute money towards the costs of winding up the company as creditors I can't see that being a good idea at all and may surely deprive them of their entitlement to statutory redundancy as well as asking them to lose £350 for nothing.

So there is nothing that can be done as a director as far as I can see. If some clever busybody with money to burn wants to do you a favour by winding up the company then I would at least buy him a drink.

Your worries with the demise of the company are all history - they're not in front of you unless you have personally guaranteed the companies debts.

Hi Gyumri

Let me explain this more clearly.

As it is unlikely that a trade creditor will take steps the wind up the company through the Courts, the employees can do so, individually or as a group, which is what I was describing.

Their contractual entitlements are not lost, in fact it is to their benefit as the winding up Order will mean that with guidance from the Official Receiver, they can then make claims against the Redundancy Fund. Without this they are stuck and unable to claim.

Additionally if there are sufficient assets they will recover their costs of the winding up petition as a prior statutory expense. So in that event it would have cost them nothing and their claims can be paid via the Redundancy Fund.

I hope that this helps.

Thanks.

 

[Gyumri]

2. If your 14 staff would be able to contribute about £350 each that could collectively cover the legal costs of a winding up petition. Then with the resultant winding up order in place they would be able to make claims against the Government redundancy fund for contractual amounts due to them.

Why can't the staff simply be made redundant? Insolvency is not a pre-requisite in order to claim from the redundancy fund so why should the employees have to bother to wind up the company, especially as there seems to be nothing in the pot?

 

[Newchodge]

Why can't the staff simply be made redundant? Insolvency is not a pre-requisite in order to claim from the redundancy fund so why should the employees have to bother to wind up the company, especially as there seems to be nothing in the pot?

How, precisely, without an insolvency practitioner issuing the relevant reference, do staff claim redundancy from the redundancy fund?

 

[Frank Wessely]

They cannot. That's the point. Claimants require a case reference number which will only be allocated once an IP or the Official Receiver is appointed. The company will need to be in an insolvency process.

For more detail here is the link to the Government website - https://www.gov.uk/government/publi...eet/what-to-do-when-youve-been-made-redundant

Thanks.

 

[Gyumri]

The OP cannot save the company so there is nothing he can do or needs to do. The redundant employees can if they can afford it petition to wind up the company but to claim 1 weeks wages for every year worked? that's not likely to be feasible and there's a limit to what can be claimed.

If the staff have been paid up to date then they'll probably want to spend time looking for other work.

As far as the OP is concerned his worries are over.

 

[Newchodge]

The OP cannot save the company so there is nothing he can do or needs to do. The redundant employees can if they can afford it petition to wind up the company but to claim 1 weeks wages for every year worked? that's not likely to be feasible and there's a limit to what can be claimed.

If the staff have been paid up to date then they'll probably want to spend time looking for other work.

As far as the OP is concerned his worries are over.

Notice pay, holiday pay, etc etc

 

[Gyumri]

Notice pay, holiday pay, etc etc

It can't be helped. There needs to be some realism regarding the expectations of employees.

Holiday pay doesn't come into it. Either the employees have had their 28 days paid leave or they haven't.

I doubt if the OP has had a holiday in 10 years. You can't expect an employer to give notice if his back is against the wall.

It's like complaining to the captain of the Titanic as it sinks beneath the waves that you haven't been given proper notice or that you haven't used up all your holiday entitlement.

Employees are not the only ones who lose out when a company can't survive.

 

[Lisa Thomas]

@Gumri If the company enters a formal insolvency procedure the staff can claim outstanding holiday pay, notice pay, wage arrears, outstanding pension contributions and redundancy pay form the government. (capped at certain statutory limits).

These can sometimes be huge sums depending on their length of service.

If the company does not enter liquidation their only recourse is to claim via an employee tribunal. This will likely take over one year and only their redundancy will be processed.

It may therefore be beneficial for the employees to club together to pay to wind the company up so they can get their money back from the government and avoid reducing their claims and having to claim via a tribunal.

Holiday pay does come into it because they are entitled to claim for any outstanding holiday (pro rated) up to the date of termination.

 

[IanSuth]

It can't be helped. There needs to be some realism regarding the expectations of employees.

Holiday pay doesn't come into it. Either the employees have had their 28 days paid leave or they haven't.

I doubt if the OP has had a holiday in 10 years. You can't expect an employer to give notice if his back is against the wall.

It's like complaining to the captain of the Titanic as it sinks beneath the waves that you haven't been given proper notice or that you haven't used up all your holiday entitlement.

Employees are not the only ones who lose out when a company can't survive.

Gyumri,

You really ought not to give advice on areas you have little experience of

Redundancy of 1 week per full year (and 1.5 week for years when 41 or over) plus unpaid holiday and pay in lieu of notice can all be claimed from the Redundancy Payments service but they want a ref number which you can't get quickly if there is no IP is involved

If the company hasn't entered formal liquidation it can be hard for employees to get the correct paperwork to start benefit claims as well.

 

[Gyumri]

@IanSuth is correct

The OP is concerned about the employees and their entitlement to redundancy but there is nothing he can do about that because his business has ceased.

All he can do is to say sorry that the business didn't work out. He can't afford to pay £3000 or thereabouts to enter a CVL - hence the suggestion that the employees club together to wind up the company.

That seems to be a novel approach.

 

[Frank Wessely]

@IanSuth is correct

The OP is concerned about the employees and their entitlement to redundancy but there is nothing he can do about that because his business has ceased.

All he can do is to say sorry that the business didn't work out. He can't afford to pay £3000 or thereabouts to enter a CVL - hence the suggestion that the employees club together to wind up the company.

That seems to be a novel approach.

Hi Gyumri,

Agreed, that's why I suggested it.

Thanks.

 

[Newchodge]

@IanSuth is correct

The OP is concerned about the employees and their entitlement to redundancy but there is nothing he can do about that because his business has ceased.

All he can do is to say sorry that the business didn't work out. He can't afford to pay £3000 or thereabouts to enter a CVL - hence the suggestion that the employees club together to wind up the company.

That seems to be a novel approach.

It is only novel to you because you don't understand.

 

[Gyumri]

It is only novel to you because you don't understand.

Correct. I've never heard employees taking an insolvent employer to court so that they can then claim against the redundancy fund.

That why I thought the approach was novel.

If it allows the OP to sleep easily then he could suggest it to his workforce if it's not going to poke a stick into a hornets nest.

 

[UKSBD]

Can insolvency companies provide a service that arranges this and charge each employee commission?

It sounds like a Win Win service if there are numerous employees affected and it is the only way they will get what they are entitled to

 

[Newchodge]

Can insolvency companies provide a service that arranges this and charge each employee commission?

It sounds like a Win Win service if there are numerous employees affected and it is the only way they will get what they are entitled to

Why do you need to pay an insolvency company?

 

[UKSBD]

Why do you need to pay an insolvency company?

Because of what Frank said

2. If your 14 staff would be able to contribute about £350 each that could collectively cover the legal costs of a winding up petition

What are the chances of 14 employees arranging to do this?

If someone provided the service, didn't charge upfront but the employees agreed to pay the £350 out of what they receive, I would think there is far more chance of achieving a result.

 

[Gyumri]

If someone provided the service, didn't charge upfront but the employees agreed to pay the £350 out of what they receive, I would think there is far more chance of achieving a result.

The winding up route of the employees clubbing together and each paying £350 to petition to wind up the company is novel because the OP could simply pass a resolution that the company is insolvent and will be wound up ie enter a CVL. There's no need then for any employee to dip into their pockets to petition the high court for a winding up order.

Insolvency is defined as and from the date of the resolution.

 

[Lisa Thomas]

OP cannot pass such a resolution because his ex won't approve the resolution per his initial post. That only leaves dissolution (where employees only recourse will be via a tribunal and they will only be able to claim redundancy and it will likely take over a year) or compulsory winding up via the court.

BTW It's not a novel suggestion for the employees to club together and pay to liquidate.

It's just something that we rarely advise because it's not often suitable to the circumstances.

 

[Lisa Thomas]

Can insolvency companies provide a service that arranges this and charge each employee commission?

It sounds like a Win Win service if there are numerous employees affected and it is the only way they will get what they are entitled to

Not for a compulsory winding up as it's a court procedure not an IP procedure.

However Solicitors can often help with the application, but if solicitors are instructed the cost will go up.

 

[UKSBD]

Not for a compulsory winding up as it's a court procedure not an IP procedure.

However Solicitors can often help with the application, but if solicitors are instructed the cost will go up.

I didn't mean the IP do it, but the IP arrange it as part of a service.

Could you imagine what would happen if the boss of a company that had just laid of all their workforce, then turned round to them and said give me £350 each and I'll try and improve your redundancy package.

I assume IP's have solicitors as part of the team, or if not, have contacts with them.

The IP (or whoever provides the service) wins by getting work, solicitor wins by getting work.

Ex-employee may lose a percentage on fees, but if the other result is they get nothing - they win too.

It would be interesting to know how much money hasn't been claimed that people were entitled to due to companies not being wound up.

Could be a big business opportunity out there.

 

[Gyumri]

Could you imagine what would happen if the boss of a company that had just laid of all their workforce, then turned round to them and said give me £350 each and I'll try and improve your redundancy package.

That's why it would be a novel approach. The OP's solution would seem to be to first dismiss all the staff and then resign.

The company would then languish until some creditor applies to wind it up- but that is of no concern to the OP.

 

[Gyumri]

What will also happen is that companies house will inform the company that it must appoint a new director by a given deadline and if not the company will be struck off.

 

[Newchodge]

What will also happen is that companies house will inform the company that it must appoint a new director by a given deadline and if not the company will be struck off.

And?

 

[Gyumri]

The company will then be struck off.

 

[Newchodge]

The company will then be struck off.

You seem to be making a lot of disjointed posts, none of which are relevant in any way to the OP's dilemma or aimed at offering any solution. Please don't.

 

[Lisa Thomas]

I didn't mean the IP do it, but the IP arrange it as part of a service.

Could you imagine what would happen if the boss of a company that had just laid of all their workforce, then turned round to them and said give me £350 each and I'll try and improve your redundancy package.

I assume IP's have solicitors as part of the team, or if not, have contacts with them.

The IP (or whoever provides the service) wins by getting work, solicitor wins by getting work.

Ex-employee may lose a percentage on fees, but if the other result is they get nothing - they win too.

It would be interesting to know how much money hasn't been claimed that people were entitled to due to companies not being wound up.

Could be a big business opportunity out there.

It wouldn't usually be a service IP's offer because it relates to a procedure we do not get involved in.

A compulsory winding up/liquidation is a Court procedure/service.

If a company wanted help with this, an IP acting as middle person wouldn't really add anything, (except extra costs), hence this is usually one I would normally refer to a solicitor, but as I said that will serve to increase the costs, and the employees having to pay more, if they decided to issue a joint petition.

 

[Gyumri]

You seem to be making a lot of disjointed posts, none of which are relevant in any way to the OP's dilemma or aimed at offering any solution. Please don't.

What's your solution - if you have one?

 

[Newchodge]

What's your solution - if you have one?

The one suggested by @Frank Wessely, it resolves the OP's concerns for their staff and allows them to move on.

 

[UKSBD]

If a company wanted help with this, an IP acting as middle person wouldn't really add anything, (except extra costs), hence this is usually one I would normally refer to a solicitor, but as I said that will serve to increase the costs, and the employees having to pay more, if they decided to issue a joint petition.

Thanks, I don't know who does what but assumed the IP's would have a lot of useful information, contacts, leads, etc.

The OP is a perfect example

Say all 14 of their employees have 10 years plus of service, haven't received holiday pay, have all built up weeks of notice, are owed any unpaid wages, etc. you could easily be talking over £200k being claimed from the Redundancy payments service (or whatever it is called)

If the employees don't know how this works, don't claim correctly, don't claim in time that's £200k lost

I'm amazed the service of helping ex-employees with claims isn't already out there (if it isn't)

IP's (or whoever organise the winding up) have the data right in front of them

 

[Newchodge]

Thanks, I don't know who does what but assumed the IP's would have a lot of useful information, contacts, leads, etc.

The OP is a perfect example

Say all 14 of their employees have 10 years plus of service, haven't received holiday pay, have all built up weeks of notice, are owed any unpaid wages, etc. you could easily be talking over £200k being claimed from the Redundancy payments service (or whatever it is called)

If the employees don't know how this works, don't claim correctly, don't claim in time that's £200k lost

I'm amazed the service of helping ex-employees with claims isn't already out there (if it isn't)

IP's (or whoever organise the winding up) have the data right in front of them

Helping (ex) employees with claims is a regulated activity. I would be committing a criminal offence if I offered it, much as I would like to.

 

[UKSBD]

If your 14 staff would be able to contribute about £350 each that could collectively cover the legal costs of a winding up petition. Then with the resultant winding up order in place they would be able to make claims against the Government redundancy fund for contractual amounts due to them. Also, the costs of the petition would be repaid as a priority expense from the insolvent Estate if there are any assets to be realised.

Do they only have to start a winding up petition to be able to make their claim to the redundancy service, or can they only start a claim after the court issues a winding up order?

What happens if this takes more than 6 months from when the employee was made redundant (or would it be a lot quicker than that)?

 

[UKSBD]

Helping (ex) employees with claims is a regulated activity. I would be committing a criminal offence if I offered it, much as I would like to.

Who can help them?

Does it have to be a registered solicitor, registered IP, someone else?

Is this service already provided by any of them?

I would imagine (maybe I'm completely wrong) that we are talking £multi/million of unclaimed money ex-employees are entitled to.

 

[Frank Wessely]

Do they only have to start a winding up petition to be able to make their claim to the redundancy service, or can they only start a claim after the court issues a winding up order?

What happens if this takes more than 6 months from when the employee was made redundant (or would it be a lot quicker than that)?

HI UKSBD,

As I have previously said, the winding up Order is required, a case reference number is issued and then the Official Receiver or an IP would provide appropriate guidance to the ex employees as to how to make their claims.

In that scenario, it should not take longer than 6 months following redundancy provided the winding up petition is issued timeously however, I have encountered situations where the Redundancy Payments Office rejected claims for redundancy as the claims were made more than 6 months after the date that their employment was terminated. In those circumstances, claims for Notice Pay, Holiday Pay and arrears of wages still subsist, but not redundancy.

Thanks.

 

[Gyumri]

The one suggested by @Frank Wessely, it resolves the OP's concerns for their staff and allows them to move on.

But it doesn't free the OP from her worries. There is nothing to stop the OP from resigning and it would still allow the staff to try the novel solution suggested by @Frank Wessely at their own expense of petitioning to wind up the company if HMRC takes no interest.

If the OP wants to assist her former staff then she could try this route:-

Financial assistance for employers unable to pay statutory redundancy payments

www.gov.uk

I'm amazed the service of helping ex-employees with claims isn't already out there (if it isn't)

There seem to be quite a few companies offering that service.