So much stress...

[PloddingOn]

New to the forums, so hello everyone!

Unfortunately, myself and my wife will both be made redundant at the end of this month, with the small company we both work for going 'voluntarily insolvent'. The company produced and sold a very specialised industrial product into a niche market, and while there is still strong demand for this product, the aging M.D (75+ iirc) just wasn't able to stay on top of the finances or adapt with the changing market - He ran a very 'bloated' company and wasn't interested in reinvesting profits. He was also extremely disliked within the industry for being 'unprofessional', to put it very politely.

I have been working for this company for the best part of 20 years. I not only developed strong relationships with both the clients and the suppliers but I also developed the product itself (I am/was the senior design engineer) and I'm just not ready to give it all up and leave the product or the customers without any life line for technical support. I am literally the only person in the world that knows how this product works and how it should operate.

So, I have been trying to figure out how I can start again under my own company, to continue to produce this product and service the existing customers with spare parts and consumable items, as well as take on new customers too.

The product costs about £10k in materials to produce and sells for anywhere between £16-20k depending on the amount of units ordered at the time. There is also strong demand for the technical service, spare parts and consumable items required to keep the product working at its optimal level.

It's not unusual for one of our international customers to order 10-15 units in a given year as a single order. With other smaller international companies ordering smaller quantities throughout the year also.

I have some savings and will need to be able to pay myself £2500/month (minimum) to cover my share of our cost of living (mortgage, car, household bills etc). I will be able to do this for 6 months comfortably, provided my wife is able to get another job earning the same without too much delay. If she doesn't or can't, then I can comfortably pay our living expenses for 3-4 months since I'd be paying her share too.

I have made contact with some suppliers (whom I have very good relationships with) to explain the situation and they have been amazingly supportive. One particular supplier has offered to make the parts I need and to just pay them 'when I can' even if its 6-12 months down line to give me a fighting chance. I have had a similar response from another supplier also, that indicated that if I covered the cost of their materials, they would offer me the same extended time to clear the balance. However, the majority of suppliers will want paying proforma or after 30 days, as normal.

I have also approached 2 of our biggest international clients (resellers) and explained the situation to them (since I have a good open and honest relationships with them). To cut a long story short, they are incredibly grateful I am deciding to try and do this on my own, since they would have an army of angry and disgruntled customers on their case, not able to have their products serviced or their business operations expanded with the use of our product.

I 'believe' I essentially own the IP for the product, since all of the technical drawings have my name on them and were fully designed and created by me (albeit on company time). The company is going into full asset liquidation, so I don't believe there will be a 'claim' for the IP. I am not too concerned with this currently, since the IP is not really worth anything to anyone (except our company) and nobody would really be able to do anything with it initially, without my expertise.

My plan is to get an official order from our big international customer for say, 15 units. I'm hoping to be able to then take this to a business start-up loan company and ask for the money to buy the materials needed to complete the order (approx. £150-200k) - I would be willing to use my house to secure the loan (is this a bad idea?). Once I'm paid for this order (approx. 1-3 months to complete), I plan to pay back the loan in full, since I really dislike having any large unwieldy debt, other than a mortgage.

This should leave me with enough money in the business bank account to continue operations going forward. Other day-to-day areas of the business are fulfilling spare parts orders, service and maintenance on the units within the UK and fulfilling any smaller product orders. If another large order came in soon after (unlikely, but certainly not unheard of), I would hope that perhaps I could get another loan to cover the material cost and pay back in full after the order is completed, as before.

If I cannot secure a large order to start with, I will continue on anyway with hosting a new website where clients can continue to order spare parts and consumables and obtain technical advice on the product. Spare parts orders often total £5k+ every month, this added to physical service work should allow me 'keep the lights on' by itself. I have estimated the running costs of the company (van, storage unit rental, insurance, hosting etc) to be about £1200 - Not including paying myself,

As you can probably tell, if you've managed to get this far into this post, I am by no means a businessman, but I have two beautiful daughters to feed and clothe, so I am incredibly determined to succeed! I am very 'nut and bolts', straight talking, open and honest. I have been running my own online 'micro-manufacturing' (basically my hobby) company from home that takes up about 2-3 hours per day of my time, with a consistent monthly turnover of £3k (~50-65% margin, selling to the general public internationally on all the common marketplaces and my own website), of which I do my own tax returns, so I have a small amount of experience running a business with regard to record keeping for taxes etc. Obviously I'm aware that this new venture is a completely different kettle of fish and will be business to business selling under a VAT registered limited company, which I am very much less educated and experienced in.

I'm not entirely sure how I will pay myself from the limited company going forward. From what I understand I can have a running directors loan account, where I can initially put say, £10k of my personal savings into the company bank to cover costs and then be able to pull out later in the year with no tax implications(?) provided there is money there to take back, of course. Like I said earlier, I would need to eventually be taking £2500 a month to cover my share of basic living costs. I don't know if I do that monthly or as an annual lump sum or?

Am I going crazy, or, is this at least the start of a good plan? Everyone I have spoken to so far (family, friends, customers and suppliers) say its a great idea and that if anyone can do it, its me. I'm just concerned they are trying to give me positive vibes in a time where my entire world is crashing down... I believe it can be done, I just don't want to overlook anything obvious or miss any huge pitfalls.

I'm not even sure who I can turn to for advice, hence this post here.

Please do critique my plan or offer encouragement or advice, rip it to shreds if need be - I'm open to hearing everything before I start pumping my life savings into this. Am I dreaming if I think a business start-up loan company will give me £200k off the bat?

Many thanks,
Plod

 

[MBE2017]

Congrats on thinking things through, long post and I will put a couple of thoughts down, I’m sure others will contribute.

Your bosses old company of many years standing, bloated etc, any idea on the last few years turnover and profit, if any?

The IP to the product belongs to the company, not yourself. I would recommend you look to legally obtain the IP from your old boss or IP if there are any involved.

Whilst you have a good relationship with suppliers, customers etc, try not to believe everything said in phone calls, do not expect any favours or special treatment, plan for the worst.

Is it a good idea to risk your house by using it as security? Preferably no, you have your family to consider. If you have a potentially good business banks might offer finance it partly, but with things the way they are atm and a bad recession possibly running longer than wanted, I would expect most to want security. Why not approach some of these distributors etc and offer them a stake in the company to get it going, with maybe a buy back clause? This would also confirm how much they truly want supplies in the future. It would also help secure the orders going forward.

If you cannot do it without risking your house, maybe consider just starting offering a spares service to begin with?

Everyone thinks ideas are good, particularly their own friends and families. You have the start of an idea, it could potentially work, but you need too thoroughly cost everything out and ensure you put good honest figures into your plan, and not adjust them to make it work.

Best of luck.

 

[DontAsk]

You almost certainly DO NOT own the IP. You will need to negotiate for the rights to use the IP.

 

[Paul Kelly ICHYB]

Speak to the liquidator and see if they will allow you to phoenix the company, essentially giving you everything but the debt.

Even if it costs you more than you really want to pay, you will basically be getting everything from the old business - you need the name, rights, equipment etc.

 

[pentel]

Your bosses old company of many years standing, bloated etc, any idea on the last few years turnover and profit, if any?

Also the balance sheet. Are there substantial fixed assets, property for example?

maybe consider just starting offering a spares service to begin with?

Service and spares can be the most lucrative part of a lot of companies.

micro-manufacturing' (basically my hobby) company from home that takes up about 2-3 hours per day of my time, with a consistent monthly turnover of £3k (~50-65% margin

This covers 60% of your living costs, so is a great help.


Dealing with the liquidator will be the first hurdle, assuming one is appointed. Buying all the assets would make you the owner of the IP and stock so a definite good place to start.

 

[pentel]

Speak to the liquidator and see if they will allow you to phoenix the company, essentially giving you everything but the debt.

Even if it costs you more than you really want to pay, you will basically be getting everything from the old business - you need the name, rights, equipment etc.

We overlapped!

 

[Gyumri]

@MBE2017 offers sensible advice to a posting which has lots of twists and turns.
If the customers are so keen in continuing with the product then the solution is to get them to pay for the production costs and materials so that the OP doesn't need to get a loan.

 

[PloddingOn]

Wow! Thanks so much everybody - I did not expect to receive such great responses, so quickly!

From reading through the above, I looked in to 'Phoenixing' a company on the gov website and to be honest, I didn't realise this was even a thing. This definitely looks like my best first option,

Also from your advice, I will be trying to convince our largest international client to pay 'half up front' to cover most of the cost of materials for their expected large order (whenever it comes). The only issue with this idea is; they themselves have just been bought out by a large 'mega-corporation' who have only just been in a meeting last week with our company sales manager explaining that they are not happy with paying 50% upfront on their orders (since this is what they had been doing for all of their large orders over previous years). Typical isn't it. I will try to negotiate this with them in the coming week(s), with the view that if they cannot or will not, then I may not be able to secure the funds to begin producing units for them as before, due to the already high expenditure of setting up a new business. That option is far more palatable to me, than trying to secure a loan against my house. Lets see how grateful they are, indeed!

I do have someone in mind, one of our subcontractors, that may want to have a stake in my company in return for some funding. I have zero experience in this area though, so I would definitely need to seek advice prior to agreeing to anything with them.

Thank you so much again everybody.

I almost wondered if spending all that time writing and explaining my situation was going to be worth it... It definitely was! I'm going to spend a bit of time browsing this forum, there is clearly a lot of incredibly useful information and knowledgeable people here. What a goldmine!

 

[pentel]

I almost wondered if spending all that time writing and explaining my situation was going to be worth it... It definitely was! I'm going to spend a bit of time browsing this forum, there is clearly a lot of incredibly useful information and knowledgeable people here

Well defined first posts tend to receive well defined responses.

You will see lots of threads where dragging info out of the OP is painful.

 

[MBE2017]

Also from your advice, I will be trying to convince our largest international client to pay 'half up front' to cover most of the cost of materials for their expected large order (whenever it comes). The only issue with this idea is; they themselves have just been bought out by a large 'mega-corporation' who have only just been in a meeting last week with our company sales manager explaining that they are not happy with paying 50% upfront on their orders (since this is what they had been doing for all of their large orders over previous years).

I think it would be best to just explain you are considering continuing the company atm, and explain any initial orders would probably have to be paid in full, until such time where your new company could bear the cash flow requirements, or maybe some other option? I would deliberately be vague initially and see their reaction.

You need to gauge whether they will do this, negotiate something else or even will they even place orders in future? I’m not sure whether you have any competition or if they are bothered by dropping this product altogether.

As the prospective new owner you need to have guarantees, ie a pre paid order, not promises where they might or might not appear, at least I would before committing myself to any large investment.

You will also need to consider any other employees, how important are they, what do they bring to the table, and could offering shares to them potentially be worthwhile, they could also help to fund or part fund such a phoenix company.

One last point, bear in mind you could have supply issues, delivery / manufacturing issues and most importantly cash flow issues. It’s not unheard for many companies to be kept waiting on payments for weeks, and even months. Things rarely go as smoothly as people plan for too long.

I hope you find a way, best of luck.

 

[MOIC]

Given the information you've provided below . . .

The company produced and sold a very specialised industrial product into a niche market

I also developed the product itself (I am/was the senior design engineer)

I am literally the only person in the world that knows how this product works and how it should operate.

There is also strong demand for the technical service, spare parts and consumable items required to keep the product working at its optimal level.

It seems to me that your customers need you more than you need them, IF there isn't an alternative to your product out there that they can source, is there?

If not, you should be able to dictate your own reasonable terms even with the 'mega-corporations', albeit this would require negotiations and you sticking to your ground. An early discount term can sometimes overcome a large company's payment structure.

It's a great opportunity, although employing a manager to cover the areas where you feel you lack business expertise is a must, whether that's an existing employee, or someone new that fits the bill.

Your initial efforts are to secure the IP and any assets you feel you need to carry on the business.

Best of luck!

 

[Ian J]

From reading through the above, I looked in to 'Phoenixing' a company on the gov website and to be honest, I didn't realise this was even a thing. This definitely looks like my best first option,

Also from your advice, I will be trying to convince our largest international client to pay 'half up front' to cover most of the cost of materials for their expected large order

Phoenixing the existing company is the obvious answer but whether you can phoenix it or start afresh there is a possibility that purchase order finance could help funding the purchase of the materials, especially if you can obtain a large deposit from your customer

 

[JEREMY HAWKE]

There is some top advice from the usual suspects on here but I am questioning if you really want to do this and understand exactly what you would be letting yourself in for
My main reason is the title. You have hardly written the date on your business plan and you title this project as too much stress
You will be risking your own assets and you need to appreciate this potential loss

 

[Mark T Jones]

Your title is focused on stress

Starting and running a business is stressful, without doubt.

One of the effective ways to keep stress under some control is to research and plan effectively and honestly.

That means being slightly wary of the upbeat 'you'll smash it' narrative of your friends and paying attention to the detail of promises from suppliers and customers (the 'pay when you like' would make me nervous)

Are they actually empowered to make those promises?
Will they still ne around to back them up?
What's in it for them?

I'd definitely start work on a detailed, researched plan, focusing on projections.

It will be tedious and enlightening in equal measures - the second makes it worthwhile

Edit overlapped with @JEREMY HAWKE

 

[PloddingOn]

There is some top advice from the usual suspects on here but I am questioning if you really want to do this and understand exactly what you would be letting yourself in for
My main reason is the title. You have hardly written the date on your business plan and you title this project as too much stress
You will be risking your own assets and you need to appreciate this potential loss

Maybe I should change the title? I was being a little dramatic...

I should've been clearer - The thing that's causing the high level of stress currently is purely not knowing exactly how this next month (Feb) is going to play out in terms of the insolvency and subsequent redundancy.
Myself and my wife both earned a very good salary at this job and going from that every month, to essentially 'nothing' is a lot to swallow and just makes me feel a bit anxious and stressed at the time being. I'm not sleeping great either due to this, so its a bit compounded at the minute - I have no doubt I will mellow out once I know where I stand with everything in the coming weeks as the unknown becomes the known.

As an engineer, I like to have as clear a plan as possible to tackle any given problem; with a robust set of contingency plans if the main plan veers off track (it happens a lot). Currently, there just feels like too many variables at play that are out of my control and I'm just not used to this - It makes it difficult to plan for every eventuality.

The thought of being able to run this company in my own way would be a dream come true, something I have thought and dreamed about for years. It almost feels like its 'too good to be true' and that makes me apprehensive about setting my heart on it at this stage, since I don't know exactly how Feb and the insolvency will go (I've never been in a situation where I've been made redundant due to insolvency before, so this is all completely new to me).

I do tend to plan for the worse case scenario most of the time (so I'm normally pleasantly surprised with any given outcome because of this) so financially, I've used worst case figures for my plan and rounded everything up, or added 10-20% to estimated costs to allow for unknown extra costs etc)

That means being slightly wary of the upbeat 'you'll smash it' narrative of your friends and paying attention to the detail of promises from suppliers and customers (the 'pay when you like' would make me nervous)

Are they actually empowered to make those promises?
Will they still ne around to back them up?
What's in it for them?

I totally agree - I liken it to the 'doting mum and dad' telling their son/daughter how good their singing is, only for them to go on to Britain's got talent and be absolutely dreadful! I don't want to be that guy!

To be clear, I don't think I am, but I would be a fool to think that this will be an easy road to go down, full of success and rainbows. I do ravish a challenge though and if this doesn't work out, I would have rather at least tried my hardest to make it work, than to get some other day job and always be left wondering 'what if'?

The particular company that has promised to 'pay when you like', is one of the biggest manufacturing companies in the town next to mine. They turnover millions every month. I am fortunate to have a very good relationship with the owners of said business. Whenever I visit them, they always invite me in for a sit down chat and a coffee or tea and I do trust their integrity to the fullest. They have helped me out in the past by fast-tracking parts orders to get me to a deadline and I also do business with them with my micro-manufacturing company too (Approx £1k of work every other month and I always pay their invoice on the day I receive it even though they give me the standard 30 days).

What's in it for them? Thousands of pounds (£2-15k) of worth of work every 1-3 months - They manufacture a good deal of the parts necessary for our product. They are not even the cheapest, but their quality of workmanship is superb and as said before, they are very approachable people.

It's a great opportunity, although employing a manager to cover the areas where you feel you lack business expertise is a must, whether that's an existing employee, or someone new that fits the bill.

The plan is to eventually reinstate my wife as sales manager. She is a very 'people person' and has a very likeable personality and she had done wonders for this company in terms of sales and new business - The problem is, she was never recognised by the boss, who always just wanted more and he would interfere with customer relations and turn the milk sour. It's so bad that if I were to try and describe and explain some of the tactics and situations that he created and employed, you guys would surely think I'm making it all up.

Imagine 'Borat' but as a raging grandiose narcissist with huge self pride ego, zero patience or compassion to anybody and the early onset of dementia. It has really been a circus this last year or so.

 

[m4hmo]

I love your idea, go for it. This is how real opportunity arises. Will comment again , only read part of your first post.

 

[The Byre]

I have watched this thread with interest as it very much reflects what happened to a chap I know. He was the quality and maintenance manager at a 100-person factory owned originally by an acquaintance of mine since the 80s. They built high-end studio audio mixing desks - prices beginning with six figures, so quality and maintenance were important. (Because I knew the company so well over the years, I bought one of their desks.)

The company was sold to a US multinational who then were forced to close the place five years later when the licensed IP ran out. They tried to do some aftersales but failed miserably. The chap in question went indi and set up a far better repair and maintenance outfit and he has been thriving. He went on to improve some of the designs and sell individual pieces of very high-end audio things like microphone pre-amps. His superb compressor-limiter costs £3,500 net and is selling well.

He also makes boards that are used to replace boards within older audio desks in order to improve their performance and sells these worldwide. In short, he is continuing the legacy of the original manufacturer and making it possible for people like me to own one of their desks and keep it up to date and even sounding better and cleaner than it did originally.

So it can be done and I very much endorse the sentiment "Go for it!"

The first few months are going to be hectic and stressful, but you know that already! Good luck!

 

[Financial-Modeller]

Great opening post, @PloddingOn and good to see that you are considering this properly.

Given your sensitivity to the cashflow implications of a large order for the main product, it could be better use of your time to position yourself as the go-to person for spares and support.

This could earn a steady income stream at high margins, which would help with large future orders; contributing towards costs directly, and/or improving chances of gaining external funding.

Perhaps consider who will buy current spares inventory if you don't?

I hope it goes well for you.

 

[Socio South West]

@JEREMY HAWKE has the right question - You outline many of the challenges and needs in the Opening Post, but you have to realise that as much as you can gain, you must also be prepared to lose.

I agree with all others who say that the IP remains the property of the Company or the retiring Owner.

I see your figures concentrating on Sales Price and Variable costs..... but there are always those Fixed costs in the background nibbling away at the margin.... Have you considered Insurance, premises, etc etc ?

You are also indicating hints at extremely favourable terms from Suppliers: Make sure you have that firm in black and white rather than rose tinted hazy memories of a conversation over the phone.

It sounds like there is a lot of potential in what you have here, but as with any venture, a proper budgeted Business Plan will help you prove how viable this is and make the final decision whether to proceed or not.

 

[Michael Loveridge]

New to the forums, so hello everyone!

Unfortunately, myself and my wife will both be made redundant at the end of this month, with the small company we both work for going 'voluntarily insolvent'. The company produced and sold a very specialised industrial product into a niche market, and while there is still strong demand for this product, the aging M.D (75+ iirc) just wasn't able to stay on top of the finances or adapt with the changing market - He ran a very 'bloated' company and wasn't interested in reinvesting profits. He was also extremely disliked within the industry for being 'unprofessional', to put it very politely.

I have been working for this company for the best part of 20 years. I not only developed strong relationships with both the clients and the suppliers but I also developed the product itself (I am/was the senior design engineer) and I'm just not ready to give it all up and leave the product or the customers without any life line for technical support. I am literally the only person in the world that knows how this product works and how it should operate.

So, I have been trying to figure out how I can start again under my own company, to continue to produce this product and service the existing customers with spare parts and consumable items, as well as take on new customers too.

The product costs about £10k in materials to produce and sells for anywhere between £16-20k depending on the amount of units ordered at the time. There is also strong demand for the technical service, spare parts and consumable items required to keep the product working at its optimal level.

It's not unusual for one of our international customers to order 10-15 units in a given year as a single order. With other smaller international companies ordering smaller quantities throughout the year also.

I have some savings and will need to be able to pay myself £2500/month (minimum) to cover my share of our cost of living (mortgage, car, household bills etc). I will be able to do this for 6 months comfortably, provided my wife is able to get another job earning the same without too much delay. If she doesn't or can't, then I can comfortably pay our living expenses for 3-4 months since I'd be paying her share too.

I have made contact with some suppliers (whom I have very good relationships with) to explain the situation and they have been amazingly supportive. One particular supplier has offered to make the parts I need and to just pay them 'when I can' even if its 6-12 months down line to give me a fighting chance. I have had a similar response from another supplier also, that indicated that if I covered the cost of their materials, they would offer me the same extended time to clear the balance. However, the majority of suppliers will want paying proforma or after 30 days, as normal.

I have also approached 2 of our biggest international clients (resellers) and explained the situation to them (since I have a good open and honest relationships with them). To cut a long story short, they are incredibly grateful I am deciding to try and do this on my own, since they would have an army of angry and disgruntled customers on their case, not able to have their products serviced or their business operations expanded with the use of our product.

I 'believe' I essentially own the IP for the product, since all of the technical drawings have my name on them and were fully designed and created by me (albeit on company time). The company is going into full asset liquidation, so I don't believe there will be a 'claim' for the IP. I am not too concerned with this currently, since the IP is not really worth anything to anyone (except our company) and nobody would really be able to do anything with it initially, without my expertise.

My plan is to get an official order from our big international customer for say, 15 units. I'm hoping to be able to then take this to a business start-up loan company and ask for the money to buy the materials needed to complete the order (approx. £150-200k) - I would be willing to use my house to secure the loan (is this a bad idea?). Once I'm paid for this order (approx. 1-3 months to complete), I plan to pay back the loan in full, since I really dislike having any large unwieldy debt, other than a mortgage.

This should leave me with enough money in the business bank account to continue operations going forward. Other day-to-day areas of the business are fulfilling spare parts orders, service and maintenance on the units within the UK and fulfilling any smaller product orders. If another large order came in soon after (unlikely, but certainly not unheard of), I would hope that perhaps I could get another loan to cover the material cost and pay back in full after the order is completed, as before.

If I cannot secure a large order to start with, I will continue on anyway with hosting a new website where clients can continue to order spare parts and consumables and obtain technical advice on the product. Spare parts orders often total £5k+ every month, this added to physical service work should allow me 'keep the lights on' by itself. I have estimated the running costs of the company (van, storage unit rental, insurance, hosting etc) to be about £1200 - Not including paying myself,

As you can probably tell, if you've managed to get this far into this post, I am by no means a businessman, but I have two beautiful daughters to feed and clothe, so I am incredibly determined to succeed! I am very 'nut and bolts', straight talking, open and honest. I have been running my own online 'micro-manufacturing' (basically my hobby) company from home that takes up about 2-3 hours per day of my time, with a consistent monthly turnover of £3k (~50-65% margin, selling to the general public internationally on all the common marketplaces and my own website), of which I do my own tax returns, so I have a small amount of experience running a business with regard to record keeping for taxes etc. Obviously I'm aware that this new venture is a completely different kettle of fish and will be business to business selling under a VAT registered limited company, which I am very much less educated and experienced in.

I'm not entirely sure how I will pay myself from the limited company going forward. From what I understand I can have a running directors loan account, where I can initially put say, £10k of my personal savings into the company bank to cover costs and then be able to pull out later in the year with no tax implications(?) provided there is money there to take back, of course. Like I said earlier, I would need to eventually be taking £2500 a month to cover my share of basic living costs. I don't know if I do that monthly or as an annual lump sum or?

Am I going crazy, or, is this at least the start of a good plan? Everyone I have spoken to so far (family, friends, customers and suppliers) say its a great idea and that if anyone can do it, its me. I'm just concerned they are trying to give me positive vibes in a time where my entire world is crashing down... I believe it can be done, I just don't want to overlook anything obvious or miss any huge pitfalls.

I'm not even sure who I can turn to for advice, hence this post here.

Please do critique my plan or offer encouragement or advice, rip it to shreds if need be - I'm open to hearing everything before I start pumping my life savings into this. Am I dreaming if I think a business start-up loan company will give me £200k off the bat?

Many thanks,
Plod

One problem that stands out is how you acquire ownership of the valuable IP, which is clearly owned by the company. It seems you will need this in order to carry on running the business.

Both you and your wife will, having worked so long for the company, have quite substantial entitlements to redundancy and notice payments. You would also potentially be entitled to bring an unfair dismissal claim if the employer hasn't gone through the correct procedure.

I'm not suggesting that you should bring such a claim, but it seems to me that a good solution might be rather than phoenixing the company you simply buy it as it stands, in which case you could set off your entitlement to these payments as part of - or even perhaps all of - the purchase price.

It's not clear whether or not the company is actually insolvent - if it is then this may not be a viable solution, as buying the shares would also mean taking on the company's liabilities. However, in that event you could suggest that the company is put into administration and that you then buy the assets from the administrator. By definition this would include the IP.

You would still be able to claim your redundancy payments etc from the Insolvency Service, so at least you'd get something.

It sounds like a good business and a good opportunity, so I hope it works out for you.

 

[IanSuth]

You would still be able to claim your redundancy payments etc from the Insolvency Service, so at least you'd get something.

It sounds like a good business and a good opportunity, so I hope it works out for you.

Only if you are very careful how you do it

If not you could be deemed to have TUPE'd over to the NewCo from OldCo

This happened to me which was fine long term personally BUT it meant other staff let go (such as the cleaner) were deemed to have TUPE'd as well and NewCo had to pay their redundancy which changed the early cash flow a fair bit.

That was a decision made by an ET and was due to the exact timing of different elements of the process which had all been orchestrated by an IP but incorrectly to avoid the TUPE

 

[DontAsk]

you could suggest that the company is put into administration and that you then buy the assets from the administrator. By definition this would include the IP.

There is a possibility the IP vests in the owner and the company is using it under license.

 

[PloddingOn]

To be honest - All this talk of IP and legality issues and such, it makes me want to walk away from this company completely and just either start up fresh, with a completely redesigned version of the unit (that still performs the same job, but better) or just expand my existing micro-manufacturing company into a 'proper' manufacturing company and go from there. January sales were the best I've had in 12 months and orders are flying in still currently (and I enjoy the work too which is a bonus).

The ex-boss has gone completely radio silent on all of us, the insolvency practitioners have gone silent also and not kept their side of the deal (last Friday they led us all to believe there would be lots of answers during this week and everything would be easy and stress free for us employees - hasn't happened, they don't even reply to the many emails we have all sent as employees) other suppliers are badgering me for answers and the company is still essentially trading insolvent (clients are paying for orders they are placing that will never be fulfilled) - I was told by the CFO that 'someone' (not an employee) is drawing money out of an ATM on a company debit card, so I suspect something fishy and possibly illegal is going on. It's a complete shambles and I've grown tired of it for the time being - I don't want to be a part of it. I just want to ensure I will at least get my statutory redundancy at this point.

ACAS have advised a fellow employee that the bosses shoddy email sent to us on the 31st does not constitute an official termination of employment and have advised him not to get another job yet, since it could affect his eligibility for redundancy. I don't know who or what to believe anymore.

I'm going to use this weekend to completely decompress and take my wife and daughters out for some good old fashioned fun, I think we all need it as a family.

Thanks again for all your help, sorry I haven't posted much, its been a busy week.

Lets hope Monday brings some actual useful info so I can make some critical decisions on which direction I should go.

Have a lovely weekend all,
Plod

 

[MBE2017]

Enjoy your weekend.

 

[Gecko001]

The requirement of wanting £2500 salary a month from the firm might make good financial sense to a financial advisor who wants to sell you a pension, mortage or life insurance, but I suspect what potential investors will be more interested in your plans for the firm that is going to rise from the ashes of the old firm. They will want to know, in what direction you want to take it? What savings you are going to make. What new products if any do you want to plan for and what products you are going to drop if any. Also what personal guarantees you are willing to make.

 

[MBE2017]

The ex-boss has gone completely radio silent on all of us,
Plod

Whilst I appreciate your current frustration, your old boss is probably having a much harder time.

He might also be looking at losing part or all of a hard earned lifetimes wealth, something I wouldn’t wish on anyone.

 

[m4hmo]

To be honest - All this talk of IP and legality issues and such, it makes me want to walk away from this company completely and just either start up fresh, with a completely redesigned version of the unit (that still performs the same job, but better) or just expand my existing micro-manufacturing company into a 'proper' manufacturing company and go from there. January sales were the best I've had in 12 months and orders are flying in still currently (and I enjoy the work too which is a bonus).

Do it mate - you are intelligent enough to pull it off. The engineer in you will be risk adverse, and will try to plan for certain outcomes - in business failure is a lesson so don't be afraid to make mistakes here and there. My dad is a chartered (structural) engineer - have a lot of respect for you guys in whichever area you're in.

 

[The Byre]

I've seen this type of situation many times and the answers seem to be fairly clear - well, they do to me at least!

1. When a company is this far up shi1 creek, the obvious thing to do is to get away and stay away! There will be more trouble brewing under the cauldron lid that you don't know about, so any move to phoenix the damn thing will end in tears! And you and your family could be the ones who end up shedding them!

2. Set up shop as per my example above, servicing and complimenting the existing products that are already in the field, selling technical service, spare parts and consumables. Augment this with your own products that you are selling already.

3. To do all this, you must break/bend the rules and stay in contact with the existing customers. I would be less worried about using company property (IP and customer details) than normally should be the case because this turkey is going down with all hands. There is a danger that someone could buy the IP and then take action against you for infringement - everything will depend on the details and the size of the market.

4. Once you are up and running, begin to price up the cost of starting a modest production line for a replacement product. BUT with materials at £10k per unit, the sales price will have to be roughly double materials and labour at £100 per hour.

5. Once all that has happened, approach someone like our @Mark T Jones with a rough business plan - it can even be verbal at first - and get the ball rolling.