What happens when company is in receivership?

Question

I was made redundant yesterday and the company is in receivership. We didn't get notice of redundancy from the employer although we'd heard rumours and the massive sale was a bit of a give away. The receivers are sending out forms for everyone to claim wages, redundancy etc. I was only with the company for a year and a half so I know i'm not entitled to redundancy but I'm due wages and holiday pay. Will I get everything I'm due or do I have to wait for other debts to be paid and hope there's something left for me? Is it possible that i'll get nothing?

Answer 1

What happens is that the receivers or administrators will appoint some accountants to value the assets of the company.

As the answer above says, there is a strict order in which any creditors (people the company owes money to) are paid.

First slice is taken by the accountants and administrators. Otherwise they wouldn't do it!

Then there are the tax office etc, suppliers, and way down near the bottom and just above the share holders are the staff.

There are two situations where a company can go bust. First, If they make a trading loss, and there's no hope of things improving. Sadly, this is rarely the case, few directors or owners actaully believe that they are running the company into the ground. Alas, this is the best option for staff, as there will generally be ebough money to pay everyone off.

The second option, which is probably the situation you're in, is that the company has been making a loss and has now completely run out of money. This means that the only money left is from the sale of their assets. The massive sale was probably a last attempt to get some cash; that could have been to stave creditors off, but if it's a small company it's quite often for the owners to get what money they can and give themselves a final bonus, they're last in the pecking order when it comes to paying out.

So, alas, I wouldn't bank on getting any of the money you're owed. Plan on not getting it, do what you need to to pay your own bills, and if and when they pay the staff something it will be a nice surprise.

Obviously most people can't afford to suddenly lose a month's wages. If you are badly affected by it, phone all the companies you owe money to and explain your situation. They will be sympathetic, it's not your fault. If you don't do that, and suddenly can't afford to pay a bill, they will start charging you for not paying and it will badly affect your credit rating. The one bill you MUST try and pay - if you have one - is your mortgage. That's the first and biggest thing on your credit rating. Missing one payment will affect you for years to come, and if you are in dire straits financially for a while you'll need the goodwill of anyone who can lend you money.

Answer 2

You will get paid your notice period and holiday pay by the government. There is a limit to this which is about £300 per week and it may be taxable. If you got paid more than that then you lose out.

When I got made redundant by the receivers I also got paid for 13 weeks on top of my redundancy as they made more the 50 people redundant. This was for the consultation period they should have had before making any redundancies.

As far as any other monies from the company are concerned don't hold your breath as the taxman, banks and the receivers all get their share before you.

Answer 3

this is a shame which you used a common financial company card and not a mastercard. regrettably while a company is going bust human beings like the tax guy are the 1st to get any funds back if there is any. The undesirable previous shopper is final in line. in case you had paid via mastercard you ought to probable have claimed the money back. as this is i think of that's unlikely which you will get something back. Sorry.

Answer 4

You will have to wait months, and yes, I believe Inland Revenue and VAT come first in the 'pecking order' ... so it's quite possible you will get nothing ...