Insolvency at work

[Rich#1984]

The company I work for has just entered in to insolvency the owner is throwing accusations to old partners in the company being the cause of it but trying to reassure us that everything is ok I’m not too sure does anybody know anything about companies entering insolvency or have any advice ie leave and get a new job ASAP of stick with it because everything will be ok

 

[rtbcomp]

One of my customers did that, "everybody will get paid". Didn't see a penny.

It all depends if the insolvency practitioner can sell the company or realise assets, and then there is a pecking order.

 

[Rich#1984]

Basically from what I understand the M.D. and financial director fell out the financial director walked out and left the business the M.D. is now saying the only way to get the business totally free from him he bankrupt the company sold it to a family member who then gifted it back to him to be honest all I want to know is should I just get out ie take any job going or stick it out in the hoe the business makes a miracle come back

 

[colnerov]

Ref. rtcomp's post. Yes HMRC first.

 

[Rich#1984]

Ref. rtcomp's post. Yes HMRC first.

Meaning ?

 

[gaz1]

i cant say by your reference

but from some point of other reference im aware of companys going into liquidation or even going under then opening in another name new director

some companys even have the original workforce from the old company to the new company

its normally swapped to other directors

note it all depends on what your other workcrew says about it you will find out more from them

 

[MattF]

Meaning ?

Money owed usually gets paid to HMRC, & everyone else gets shafted.

 

[Rich#1984]

i cant say by your reference

but from some point of other reference im aware of companys going into liquidation or even going under then opening in another name new director

some companys even have the original workforce from the old company to the new company

its normally swapped to other directors

note it all depends on what your other workcrew says about it you will find out more from them

Other than myself and a apprentice the work crew have all worked there for 30+ years and are very stuck in there ways so much so the company has no online presence no website no Facebook nothing they relay on word of mouth and existing contacts surely you can’t run a business like this in 2018

 

[Rich#1984]

Money owed usually gets paid to HMRC, & everyone else gets shafted.

Brilliant time to move then I think

 

[MattF]

I, personally, would.

 

[rikrobson]

If he phoenix's the company then it would be business as usual. Other wise if the company gets bought then some may keep their jobs but if its shut up shop time then good luck.

 

[Ashley Burton]

I would start looking for a new job just incase!

As soon as the money stops then I would be gone.

 

[tlovatt]

Depends upon the insolvency and what the person running the company will do, there are 3 main types:

CVA - this is a way of shedding debt as all the creditors take a cut in what they are owed so the company can carry on trading, it is unlikely to be this is he wants to change the ownership
Administration - This is where an administrator is appointed to run the business as a going concern to see if a buyer can be found, if the business is sold out of administration then it can emerge with new owners and no debt
Insolvency - A Receiver is appointed and the business is shut down / broken up and the money released to creditors.

If he is looking to keep the business running with a new ownership structure then he may be attempting a pre-pack Administration where he has already agreed to buy the business of the Administrator - you should have been given formal notice about the insolvency by whoever is running the company

 

[Wendelspanswick]

If you use your own tools it might be worth removing them.
A friend is a joiner and when his firm went into liquidation they seized his tools, took him 4 months to get them back, in the meantime he had to buy replacements for his new job!

 

[julianf]

If the company had debt, and significant capital (think tooling) then it's likely to be a gonner, as the capital (the equipment) will be sold off to cover the debt.

The only way out of that is if the new owner has the funds to buy the equipment from the creditors. As to how likely that is....

You surely need to hedge your bets. Don't believe anything about getting paid, still having a job, etc. But don't throw it all away with what you say either. Get a backup plan in place but don't necessarily use it.

 

[rtbcomp]

I think the insolvency practitioner gets 1st dibs. If not they wouldn't do it. HMRC 2nd. The banks will most likely have security on directors' personal assets. Then employees & secured creditors, other creditors, shareholders.

Don't forget as an employee you can claim job-seekers allowance if the company does go bust, so if you like the job I'd hang on, if you think it's time to move anyway then move. In the meantime hope for the best and expect the worst.

 

[rcx132]

I've seen a few insolvencies. The owners always say don't worry, what else can they say, they need to minimise the damage and maximise how much money they get out the insolvency. Insolvency can be costly or profitable, so the owners tend to twist things to get it to go their way.

One of the occasions the company my dad worked for went insolvent. The owner promised she will pay him from her private funds so he worked like a donkey to keep the company afloat. She didn't pay him. He lost a lot.

Phoenix companies are usually illegal, but I see a lot of them because there's no one responsible for policing that kind of thing. It's not a police matter, it's not a companies house matter as they are just a paperwork/archive organisation, so it's up to the consumers or employees who get shafted by companies "phoenixing" themselves to bring civil claims.

 

[rtbcomp]

...so if you like the job I'd hang on....

As a caveat - as long as you're getting paid!

 

[rcx132]

I think the insolvency practitioner gets 1st dibs.

At a guess I would say that the practitioners require the owners to guarantee their fee, i.e. if the company can't pay them then the directors or owners need to pay them. The law says HMRC get first dibs and no practitioner can change that.

 

[Robotstar5]

When I worked for a company that folded, the administrators told me I would get nothing from the company due to the pecking order (administrators, HMRC etc.) but they did point me to a government dept. that paid me what I should have got in terms of redundancy and holiday pay.