G&K - What happens when a company goes into liquidation?

Richard what happens when a company goes into what happens to you are owed wages ha redundancy pay and pay in lieu of notice yes well one of the first things that a liquidator does is process the employee claims and the employees can actually claim for redundancy depending on how long they've worked for the company and that's up to 400 pounds a week they can claim there's also a plaintiff notice where they can claim for up to 12 weeks paid leave notice of us one week's pay for each year service there's also the rears the paint they can claim for up to eight weeks and holiday pay the balance of their holiday entitlement they can also claim that and where does that money actually come from with the companies in liquidation of that that comes from the insolvency service which is part of the department of business industry and skills and that will normally get paid between three and six weeks after the companies go into liquidation Richard when you're appointed as a liquidator or administrator who sells the assets and can directors buy the assets back yes well this one the liquidator has a duty to sell the assets for the best price possible in some cases we have to sell plant equipment other assets cars through an agent when the company's closed down and the directors hasn't got any interest in the asses at all but on occasions the director is the person that's really knows the value of the assets and if he wants to carry on trading or set up a new business he could do so and he's probably the best person to buy the assets and in that case we would take our agents advice as to what an offer was acceptable as long as that directors offer is above that we'll go along with the director and he'll pay us the money from history is having personal resources and he can set up another business and do that as long as really hasn't been doing this over and over and over again in which case we would be a bit more wary about that what will the bank do when they hear about company going into liquidation well the bank will automatically freeze the venice' cans the liquid ice will rise to them and we'll be asking him about asking the bank about the movements on the account and most of the details including if they've got a debenture the bank will write to the liquidator and ask if there's going to be any realizations from the assets about and about their recovery and if they haven't got a charge over the assets there could well be some realizations paid into the bank as a result of that that's probably several months after the commencement of the liquidation in terms of liabilities can creditors recover stock that they've supplied well this depends on the terms and conditions that they've given to the company they could claim a retention of title and then it depends if those terms are a simple clause or an all money's clause so they've really got to either identify the goods that may be on the premises or they've got to prove that they've got their clauses are incorporated into the terms of trading and that's something as a liquidator looks at and if there is stock there and the conditions are met yes they can take stock back what should a company do with HMRC are threatening to take walking possession over a company's assets well this is really where their directors need to take advice very quickly otherwise they could risk losing those Goods and any value that's in those Goods for the for the company and the creditors otherwise Revenue customs would take possession of those Goods and sell them so they really must talk to her it's obviously practition very quickly if that's if that happens Richard a creditors voluntary liquidation a CVA how much will it cost well that's a question we quite often get asked by by directors and really we can't really answer that question until we've got a much deeper understanding of the case so we have to ask the directors about what sort of assets there are there the employees how many creditors there are they had any other any legal disputes ongoing are there any other matters that they ought to bring to to our attention and I think before we can actually formulate what the cost might be we'd normally have a no-obligation meeting with them and really say well this is what it would cost to get up to a creditors meeting stage and then depending on what happens then it's really based on time costs after that but that's very difficult to put down an exact figure with administration what's the difference between a pre-packing ministration and administration's yes well again this is another question we get who do get asked quite often pre-pack administration is is really where the companies are insolvent and the there's a ongoing business there and the business can't see straighting but it has to have someone else to take it over immediately without it being being closed down and that's where a prepackaged ministration can really be beneficial it enables the continuity of the business one second it could be trading as the old company a slow agreement signed and a new company takes over over the assets and the old company is allowed to die in an administration situation there is an ongoing business viable business there but it's probably will take some time for that to be sold and there needs to be a trading period involved and administrator's would then develop a marketing strategy a trading strategy and ultimately sold the business perhaps three or four weeks after administration but the costs of both are roughly the same with the pre-pack the costs are built in before the appointment and Noble administration the costs are built in mainly after the appointment the company voluntary arrangements what why go into a company voluntary arrangement well in this sort of situation the directors don't want to lose control of the business and if they can see a way out of the position they're in at the moment CVI of company voluntary arrangement it gives them a breathing space to recover and that breathing space is actually lustful but can be up to three to five years and they pay so much back to call the supervisor over that period and the end result is the creditors should get anything between normally 33 and 53 in the pound back so the directors are in control we're not running the company we're just so that's all really to enable predators to get a payment back which can you give me some examples of actual companies that you've helped him and the way that that has happened yes we've dealt with the printing company recently it had been trading for over 20 years and with the recession and everything going on lower ones they found they couldn't continue to try it and there were many employees had got 20-year service the directors had reached retirement age and they couldn't afford the redundancy costs and the result of that was that the company did go into liquidation we did sell the plant a new plant and equipment but I think the main thing from the employees perspective wasn't they got on average around about 15,000 pounds each from from the insolvency service which the directors couldn't afford to pay themselves so that was a plus there and resulting so with plants and equipment really meant that they the bank got paid as well another example is a window company and in this case they again suffered the effects of the recession they were doing in contracts for schools replacing windows and they couldn't survive with the number of staff that they'd got so we we looked and realized they've got a good business plan going forward that they needed to cut the number of staff and what happened there is we recommended a company voluntary arrangement we got some forecasts drawn up for the company and the result of that was that creditors meeting the creditors approved these proposals the company going forward and it did mean that's the company didn't have to pay the redundancy cost for the employees because those and those were met from the government who then became creditors of the company and received dividend payment payments over over a five year period so that's really a success story of a company in a voluntary arrangement taking taking their business business forward with Dodaro direct still in control another example was a haulage company we talked with last year and that was where the revenue had actually gotten distraint over the company's drivers and trucks for around about two hundred thousand pounds and they hadn't got the money or wherewithal to pay that so they came to us where we had a meeting with them and we recommended that they go down the pre-pack administration route because they realized that they had lost a lot of contracts over the past six months well they had have got a core business going forward with customers that still use their services so we arranged sales pre-pack sailed to another company which was actually owned by the directors we've got a value into value of the trucks and trailers talked to the Revenue and Customs and they said yes we'll go along with that and the result was that this company's continued to trade now in the new format and saved probably 40 out of the 80 jobs as a result of that example using a pre pack administration Road Richard tell me about your team yes well on the corporate insolvency side I've got seven team and team members I've got over 60 years experience themselves and with myself and Tim that makes us over a hundred years which is quite a lot of insolvency experience and it deals with all corporates in Psalms is company volunteer Arrangements administration's liquidation so we really cover the whole whole sphere tell me about your background Richard how did you get to where you are now yeah well I've started in insolvency of one of the big four firms in Birmingham and I've had 19 years experience there was another act years experience with Griffin and King now and I want to prefer the smaller niche firm and you actually deal with real people and trying to understand their problems and help them and I think that that's really beneficial

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Keywords: insolvency, practitioners, debt, bankruptcy, administration, IVAs, CVAs, DROs, CVL, PPA, MVL, liquidation, debt solutions, company bankrutcy, insolvency practitioner, Griffin & King, Insolvency videos, Insolvency service, Insolvency law uk, Insolvency law, Insolvency and bankruptcy, Insolvency act, Insolvency agency, Insolvency Birmingham, Insolvency procedure, Insolvency uk, #insolvency, #insolvencypractitioners

Id: seIAqOlRRVY

Length: 11min 59sec (719 seconds)

Published: Tue May 08 2018