Redundancy and Bankrupcy

spacebiscuit

Hi,

Looking for some advice following redundancy. Went into work on Monday and was told the company has run out of money and we were all dismissed immediately. I had worked there for almost a year, contract says notice period is 90 days and I had unpaid holiday.

Does the notice period still apply if the company has run out of money? Not sure where to start or what exactly I am entitled too.

Thanks,

Adam.

John1993_2

You don't lose your employment rights, but if they are bankrupt then they may well just have no money to pay you. You'll become a creditor of the company, and will be in line with others (customers, suppliers etc.) to receive what you are owed.

There may well be no money left by the time they get to your place in the queue, but it'll need someone more knowledgeable than I am to tell you where staff stand relative to others.

Two4Tuesday

The administrators, once appointed should send you a claim form for the redundancy payments service. They will pay your outstanding wages and notice period if you claim (subject to a cap of £430 per week).

However, you need to mitigate your costs by signing on for JSA immediately otherwise you won't be eligible for notice payments from them.

dancingfairy

I think there is a government scheme you can claim off. You'll have to ask the administrators. I'm not sure if this is the thing that Two4Tuesday is referring to?
Hope you can get something sorted.
df

Two4Tuesday

dancingfairy wrote: »

I think there is a government scheme you can claim off. You'll have to ask the administrators. I'm not sure if this is the thing that Two4Tuesday is referring to?

Yes, I'm referring to the same thing

JCS1

John1993 wrote: »

You don't lose your employment rights, but if they are bankrupt then they may well just have no money to pay you. You'll become a creditor of the company, and will be in line with others (customers, suppliers etc.) to receive what you are owed.

There may well be no money left by the time they get to your place in the queue, but it'll need someone more knowledgeable than I am to tell you where staff stand relative to others.

Employees are a preferred creditor and get paid first. if no money in the company to do this, then you can claim from the Redundancy Payment Service.

spacebiscuit

Thank you for the replies.

I'm concerned that my former employer is going to disappear and and not actively help me out, I suspect they will not respond to my requests for help or advice and I'm therefore reluctant to leave in in their hands and wait for a claim form to arrive, so I think I need to be proactive and on the front foot.

Who decides if and how they can pay, because I suspect that the company has not run out of money, I believe their business plan has failed and they are cutting their losses before they waste any more money, so although they are claiming to have gone bust technically they haven't.

JSA - is that Job Seekers Allowance? Why would not claiming this jeopardize my notice payments? Having not ever claimed this I'm reluctant to do so unless it's absolutely essential which it isn't currently.

Thanks,

Adam.

John1993_2

spacebiscuit wrote: »

Thank you for the replies.

I'm concerned that my former employer is going to disappear and and not actively help me out

You won't go far wrong if you assume that your former employer no longer exists, in terms of expected help from them. Anyone who could help (HR etc.) is also out of a job, so are not going to be inclined to go in, unpaid, to sort out details.

Derwent

mountainofdebt wrote: »

The first part of your answer is complete rubbish - HMRC are higher up the pecking order than anyone.

Oh no they aren't ! HMRC lost their preferential creditor status a few years ago, they now have no more status than a normal trade creditor.

The order for paying creditors used by administrators is :-

1. Secured Creditors - those which have a registered charge against the company's assets (e.g. mortgage lender or asset finance company)
2. Preferential Creditors - usually wages and payments owed to employees and pension funds
3. Unsecured Creditors - normal trade creditors including HMRC and local authorities (NDR)
4. Shareholders

If there are no fixed or floating charges registered at Companies House then employees automatically become the priority creditor.

ceh209

The order for paying creditors used by administrators is :-

1. Secured Creditors - those which have a registered charge against the company's assets (e.g. mortgage lender or asset finance company)
2. Preferential Creditors - usually wages and payments owed to employees and pension funds
3. Unsecured Creditors - normal trade creditors including HMRC and local authorities (NDR)
4. Shareholders

If there are no fixed or floating charges registered at Companies House then employees automatically become the priority creditor.

Don't forget the administrator's fees, they come top of that list

JCS1

mountainofdebt wrote: »

The first part of your answer is complete rubbish - HMRC are higher up the pecking order than anyone.

The second part of your answer is correct however.

HMRC were a preferred creditor, but it was changed with the Enterprise Act of 2003.

I used to work for the Insolvency Service.

I await your apology.