Here we give liquidation advice to a director worried about their situation.
The transcript is taken direct from our online chat service
Sarah Massey Hello. How may I help you?
Client 12:15:24 pm
Just trying to do what is best. My company is strugling and worried if we can go on much longer. If we went into voluntry liquidation there would be no momey left to pay redundancy for my one worker. and wondered if as directors we would be entitled to government redundancy 12:17:41 pm
Sarah Massey 12:18:14 pm
Hi, if entering into a creditors voluntary liquidation (CVL) redundancies are picked up via the redundancy payments office (basically the government pay) as directors you may be entitled to this too what debts does the company currently have?
Client 12:19:50 pm what entitles directors to redudancy? we also have an outstanding directors loan of £11500 I take it we would lose this
Sarah Massey 12:20:25 pm
Is the directors loan money you owe to the company or money that the company owes to you?
Client 12:20:43 pm owes to us
Sarah Massey 12:21:02 pm it is likely that this will be lost what debts does the company have?
Client 12:21:40 pm only about 12k
Sarah Massey 12:22:12 pm
ok, does the company have any assets at all? stock? machinery? equipment? cash at bank etc?
Client 12:23:08 pm yes there is about 17k owed to us and maybe 10k in equipment
Sarah Massey 12:23:27 pm how long has your member of staff been with you and how old are they?
Client 12:23:34 pm but sales are so low im worried he is 30 only 4 years but my wife and myself been going for about 20years so i was hoping for redundancy to maybe at least cover the directors loan
Sarah Massey 12:25:20 pm ok, what is your employees weekly wage?
Client 12:25:28 pm 300
Sarah Massey 12:25:55 pm and how old are you and your wife? just trying to work out what option would be best for you
Client 12:26:12 pm both 58
Sarah Massey 12:26:46 pm ok, and what is your weekly wage per person
Client 12:27:16 pm i am on 23500 and my wife 10k sorry my wife is 11500
Sarah Massey 12:28:09 pm ok great, do you put all of your salaries through PAYE?
Client 12:28:18 pm yes
Sarah Massey 12:28:39 pm Is any of the 12k debt that you have personally guaranteed?
Client 12:29:26 pm no but i forgot the company is leasing a copier
Sarah Massey 12:30:30 pm ok, how much longer is left on the lease? what are the monthly payments? also do you rent the premises that you trade from? if so how much longer is left on that lease? 12:31:02 pm
Client 12:31:26 pm my wife is not hear but we have 19 months of about £390 pm
Sarah Massey 12:31:46 pm ok does it have a personal guarantee?
Client 12:32:17 pm I dont think so just leased by the company
Sarah Massey 12:32:30 pm ok great, do you rent the premises that you trade from?
Client 12:33:01 pm no we are buying it and renting it to the company
Sarah Massey 12:33:33 pm do you have a lease agreement in place for that? or is it just a rolling month agreement
Client 12:33:54 pm just rolling we have a lease but never executed legally 12:34:24 pm
Sarah Massey 12:34:59 pm when you say your worried about the business, do you think it could be viable if you came to some payment plan arrangements and made some cuts? or do you feel its the end of the road?
Client 12:36:28 pm we could maybe go on, but with hardly any money, it is just more money going into directors loan Redundancy would help us fun the unit 12:39:54 pm fund 12:40:10 pm
Sarah Massey 12:40:49 pm ok, I think the best route to take would be liquidation, this would be as follows: the assets would be sold and the debtor book would be collected c27k cash into the company. The first person to be paid would be the insolvency practitioner for the liquidation, our fee would be c£4k plus vat so would leave around 22k in the company, next to be paid... would be the unsecured creditors, in this case the 12k creditors and the c 7.5k copier agreement would be next, they would receive pretty much a full dividend back in a liquidation redundancies would then be paid via the redundancy payments office your employee would be entitled to £1,200 Your wife £5,472 and your self £12,255 weekly redundancy payments I believe are capped at £479 per week
Client 12:45:11 pm that sounds good, would we both meet the criteria for redundancy as we both work for the business
Sarah Massey 12:45:29 pm as you have been employed through the company under PAYE yes. Would you like to have a chat to one of our regional managers? they can come and have a free face to face meeting with you
Client 12:46:16 pm ok but i would like to talk to my accountant and take legal advice first
Sarah Massey 12:46:26 pm no problem at all, you can call us anytime on 0800 970 0539 we will be happy to arrange a meeting for you
Client 12:47:00 pm thanks
Sarah Massey 12:47:09 pm your welcome