Employer about to go bust?

amorphous

Hello,

I have become aware that the company I work for may be in financial difficulties.
I know we have not been paying suppliers for 6 months now, and recently discovered that there are several debt collection agencies hounding us for unpaid bills.
I have checked with companies House, and see there are 4 separate floating charges registered within the last few months. The lenders appear to be legal loan sharks, rather than standard banks.

I don't know the full details, but this could be the tip of the iceberg. It could also just be routine managing of the cash flow for all I know.

We did get paid last week, and there has been no official statements about the situation, but its very worrying.

What happens when a company goes bust.... Is it fast, will we see the recievers, or is there any signs I should look out for?
I don't think it would be in a creditors best interest to force us into administration, but I have no knowledge of how these things work.

Anybody got experience in these things

engineer_amy

I suppose it depends on the type of business, whether there are assets that can be liquidated to get cash, pay suppliers, or pay off creditors if it does go to administration/liquidation. If it is a service type company, or offering credit terms to customers, its possible they are struggling to collect cash from their clients.
Our company went through a phase like as you describe, very little cash coming in, workers still got their wages, but suppliers were strung along for a few months, we only paid the ones that got to the stage of threatening legal action. And it was just because our clients were slow at making payments, and we had a few retentions from invoices that tied up our cash flow temporarily.
Luckily it was only a temporary situation and as soon as the clients paid, all the suppliers were paid up to date and brought back to the status quo.
It happens in a lot of businesses, some unfortunately will not be able to manage in short term cash flow emergencies and will go to administration.
A creditor could force a winding up petition if they think the company is trading insolvent. It would need to be for a significant debt really for them to consider it, and they would have to weigh up whether it is likely they would get some or all of their money back if there wasn't sufficient cash/assets to pay back all the creditors.
Im not sure on the timescales of administration.


I would polish up your CV and at least put some feelers out into the job market to see what is available if you really are that worried. If things do go bad, then it wont come as a complete shock and you have a headstart on your colleagues for looking for alternative work.

Exodi

As engineer amy said; take it with a grain of salt. I was also part of a small business, and likewise, we string along creditors when cash flow got tight - staff were always paid. Sadly it only takes one or two big customers to delay paying their invoices to have these significant impacts on the business.

I would polish your CV and get a general feel for what's out there but wouldn't start panicking until wages start being delayed.

getmore4less

Have a look at the last 2 sets of results to if the cash flow looks OK.

It's a snapshot on a day but can give clues to the moneys due and the level of bad debt(customers not paying)

On the ground signs that there is a looming crisis is supplies start to dwindle.

Can be as simple as the cleaning contract has been missed or reduced and the toilet paper runs low.

It gets more serious when you can't get the things you need to do your job to bring in money.
Is the stationery cupboard running low of pens and paperclips.

Customers money roblems might result in projects getting suspended or cancelled.

Depending on the business it could be shut immediately, kept going to find a buyer for some or all of the business or just assets.