What happens to my staff if my business goes into liquidation or administration?
If a company goes into liquidation, it is likely that the business will be closed and any employees will be made redundant. If a company goes into administration, the administrator may ask some employees to continue to work although, in most circumstances, there will be redundancies. If an employee is owed wages, they may be able to make a claim via the insolvency practitioner appointed or through the Redundancy Payments Office.
How do I know if my business is insolvent?
If the company is unable to pay its debts as and when they fall due, the directors should seek professional advice from a solicitor or an accountant as to the options available. In some cases, if advice is sought immediately, the business can be saved.
How do I know if I am insolvent, what should I do next?
If you believe that you may be unable to pay your debts as and when they fall due, you should seek professional advice from your solicitor or accountant as to the options available to you.
What is administration?
Administration is a formal insolvency procedure whereby an administrator is appointed by either the court, the directors of the company or a floating charge holder. The purpose of the administration is to either attempt a reorganisation of the business or to take steps to sell the company’s assets under the protection of a moratorium. Creditors cannot take steps against the company whilst it is in administration but they may be able to recover goods under a retention of title clause.
What is liquidation?
There are different forms of liquidation including members’ voluntary liquidation, creditors’ voluntary liquidation and compulsory liquidation. A members’ voluntary liquidation is where a company is solvent and able to pay its debts but the shareholders wish to cease trading and wind up the company’s affairs. A creditors’ voluntary liquidation is where the directors of a company believe that the company is insolvent and can no longer trade. A compulsory liquidation is where a creditor of the company applies to the court for an order winding up the company.
I have received a statutory demand, do I need a solicitor?
It is important that you deal with the statutory demand quickly to prevent a bankruptcy petition being issued against you. If the money is due, you will need to make payment. If you are unable to make payment, you may wish to contact the creditor and agree a repayment plan or look at other options such as an individual voluntary arrangement. If the debt is disputed, you will need to make an application to the court asking for the statutory demand to be set aside (if this cannot be agreed with the creditor). You have a limited amount of time to deal with a statutory demand and, therefore, if you require any assistance in dealing with the statutory demand, you need to obtain advice quickly.