P.K.F ,Got the letter
Discussion
This morning,after turning up for work,i arrived home to find the letter to say do not report to work.
:bye bye: quote "As you are by now aware,there were no funds available and accordingly the company was not in a position to meet the December payroll,which would normally have been paid on 29 December 2006".
:bye bye: quote "As you are by now aware,there were no funds available and accordingly the company was not in a position to meet the December payroll,which would normally have been paid on 29 December 2006".GreenV8S said:
That implies they have been trading while insolvent, which is a serious offense which the directors can be held personally liable for. Don't lose that letter.
I don't think that's necessarily true. If the business is unable to meet its government liabilities (tax, NI) the Directors are legally responsible. Provided the liquidators are called in prior to *this* the firm can go down owing money to suppliers, the bank, the employees, whoever, IIRC.
Generally this occurs when the Bank pulls the plug. As a Director you then know you can't meet government obligations and so if you continue to trade for any reason you can go to jail.
Liquidators will pay employees and suppliers some compensation out of whatever's left after
1) The government has had its pound of flesh
2) The Bank has had its money
and not before.
I've only had close dealings with two firms that have "gone down" so my understanding could be a little out of date.
I will add - even Senior employees (not technically Directors) - can face jail if the Company knowingly trades whilst insolvent (i.e. unable to meet its government liabilities).
Not certain as to whether or not debts to other parties than government count for this purpose. I didn't think so, though...
Don said:
GreenV8S said:
That implies they have been trading while insolvent, which is a serious offense which the directors can be held personally liable for. Don't lose that letter.
I don't think that's necessarily true. If the business is unable to meet its government liabilities (tax, NI) the Directors are legally responsible. Provided the liquidators are called in prior to *this* the firm can go down owing money to suppliers, the bank, the employees, whoever, IIRC.
Generally this occurs when the Bank pulls the plug. As a Director you then know you can't meet government obligations and so if you continue to trade for any reason you can go to jail.
Liquidators will pay employees and suppliers some compensation out of whatever's left after
1) The government has had its pound of flesh
2) The Bank has had its money
and not before.
I've only had close dealings with two firms that have "gone down" so my understanding could be a little out of date.
I will add - even Senior employees (not technically Directors) - can face jail if the Company knowingly trades whilst insolvent (i.e. unable to meet its government liabilities).
Not certain as to whether or not debts to other parties than government count for this purpose. I didn't think so, though...
As an observation to the above :
The Accounts Department and Other Directors have (in front of witnessess) admitted over long periods of time that there was no money to pay bills etc..
Yet they have still maintained trading and pursuading suppliers to supply goods in advance of proforma invoices.
I think that the law has changed recently whereas the Government are not necessarily the first to receive monies.
A question then remains is the above considered legal !!
Edited by jaymes1 on Wednesday 3rd January 15:02
jaymes1 said:
A question then remains is the above considered legal !!
Sadly not certain. As a Director of a software company, however, I can assure you that I would not trade when knowingly government charges could not be met. The consequences of doing so are clearly laid out and are dire. A Limited Company affords some protection for its shareholders - the name "limited" is there for a reason: liability for the Company's debts is not transferred to the shareholders if the firm cannot meet its obligations.
IIRC this is not so for a Director Shareholder and government liabilities. No-one else can take you to the cleaners but the government can and it can take your house, car, wife, children, dogs, cats and then jail you if its not enough. Again this is my current understanding.
For the details we require a qualified Company, Employment and Taxation lawyer...
I believe the Government now no longer have first call on any remaining assets. A friend of mine had to wind up his company after being shafted by the company whose products he was distributing (who were shareholders in his business). Being honest he met all his liablities then went after them in court (which is still going on).
Trading when you know you cannot meet your liablities is an offence. It is hard to prove however as the opinion of the Directors has to be challenged. Their opinion may have been they could 'trade out' of their problems. I believe the test is whether or not that could be found to be a reasonable assumption on their part, or was unreasonable. In which case they are in trouble. Most people get away with it
Trading when you know you cannot meet your liablities is an offence. It is hard to prove however as the opinion of the Directors has to be challenged. Their opinion may have been they could 'trade out' of their problems. I believe the test is whether or not that could be found to be a reasonable assumption on their part, or was unreasonable. In which case they are in trouble. Most people get away with it
Also, the liquidator needs funds to pursue it otherwise he has no motivation to do the proper thing. Anyone know a liquidator do something for nothing?? My guess is NO! On another note though, anyone know a creditor being paid when a liquidator can conjur up some fees? My guess is NO!
tuscanx1 said:
Also, the liquidator needs funds to pursue it otherwise he has no motivation to do the proper thing. Anyone know a liquidator do something for nothing?? My guess is NO! On another note though, anyone know a creditor being paid when a liquidator can conjur up some fees? My guess is NO!
Spot on,No money will be left when they are done.
I have had at least three companys go bust on me since I became self employed back in 1989, and I have never received a penny from any of them. Once the company goes into administation you can kiss goodbye to any money owed.
The only people who come out of these situations well off are the administators, and the directors of the failed companies they can walk away from their mess and start again the next day under a new name debt free.
I would agree though, that if payments made by the workers for their pension fund have not reached this fund its time for proper legal advice, as this sounds like theft.
The only people who come out of these situations well off are the administators, and the directors of the failed companies they can walk away from their mess and start again the next day under a new name debt free.
I would agree though, that if payments made by the workers for their pension fund have not reached this fund its time for proper legal advice, as this sounds like theft.
Edited by Ian V on Thursday 4th January 09:12
As an ex-MGR employee I feel sorry for you!
When the assets of the company are liquidated the primary creditors are the employees and the inland revenue so as long as there is something left then you will get a slice of it. May take some time though.
If your union gets it's ass in gear it can also claim against the employer for failing to consult before making mass redundancies (this is a legal requirement). This should get you about £1500 although it is taxed.
The government will pay you within three months or so a legal maximum of ~£256 per week of your outstanding notice so that will be £1000 or so. Also if you have a pension with the company, this will either be protected or refunded by the government PPF (pension protection fund).
Hope this helps...
When the assets of the company are liquidated the primary creditors are the employees and the inland revenue so as long as there is something left then you will get a slice of it. May take some time though.
If your union gets it's ass in gear it can also claim against the employer for failing to consult before making mass redundancies (this is a legal requirement). This should get you about £1500 although it is taxed.
The government will pay you within three months or so a legal maximum of ~£256 per week of your outstanding notice so that will be £1000 or so. Also if you have a pension with the company, this will either be protected or refunded by the government PPF (pension protection fund).
Hope this helps...
Those of you who stipulate that the Government are no longer a preferential creditor are correct in this assumption. The order of payout is as follows:-
1. The administrator
2. Those creditors with fixed charges over assets
3. Preferential Creditors (ie. workers) up to a maximum of £800 per employee
4. Prescribed part (a maximum of £600k) spread over unsecured creditors
5. Those creditors with fixed charges over assets
6. Unsecured Creditors
7. Shareholders
I would suspect that preferential creditors may not be able to be paid.
In terms of trading there are two types:-
Wrongful Trading:-
"Generally a Director may be held liable for wrongful trading if they allowed the company to continue in business when they knew or ought to have known that there was no prospect of meeting the company liabilities as they fell due.
Assessment for wrongful trading will be based upon one's general knowledge, specific skill and experience as compared to those of a reasonably diligent person. A qualified accountant acting as Finance Director would therefore need to be far more vigilant than most others.
Objectives & Consequences
Wrongful trading is thus a form of civil liability which can result in a financial order for a return of funds to the company" (www.streetsweb.co.uk/wrongful%20trading.html)
Fraudulent Trading:-
"Fraudulent trading happens when a company carries on business at a time when there is, to the knowledge of the directors, no reasonable prospect of creditors ever receiving payment. This includes a situation where there are no good grounds for thinking that the company can pay its debts even if the directors think otherwise. The standard is objective"
There is obviously a fine line between them. Basically a director can be convicted of trading wrongfully if they were negligent and did not take steps as soon as they should have reasonably aware. Fraudulent trading is where a director was fully aware and hence was actively defrauding creditors by continuing to trade
Fraudulent trading is a criminal offence but still requires the offending director to make a contribution to company assets.
The problem is that both are hard to prove (and I suspect in TVR's case that Fraudulent trading has not occurred). Furthermore NS may not have been a director at times when it could be deemed that wrongful trading has occurred (if any such trading has occurred) and other directors assets will not stretch very far (particularly given that the above order of payment still stands in such circumstances).
Finally should the administrator/creditors deem that such a conviction could be made it is likely that it would not make commercial sense to pursue it due to legal costs.
1. The administrator
2. Those creditors with fixed charges over assets
3. Preferential Creditors (ie. workers) up to a maximum of £800 per employee
4. Prescribed part (a maximum of £600k) spread over unsecured creditors
5. Those creditors with fixed charges over assets
6. Unsecured Creditors
7. Shareholders
I would suspect that preferential creditors may not be able to be paid.
In terms of trading there are two types:-
Wrongful Trading:-
"Generally a Director may be held liable for wrongful trading if they allowed the company to continue in business when they knew or ought to have known that there was no prospect of meeting the company liabilities as they fell due.
Assessment for wrongful trading will be based upon one's general knowledge, specific skill and experience as compared to those of a reasonably diligent person. A qualified accountant acting as Finance Director would therefore need to be far more vigilant than most others.
Objectives & Consequences
Wrongful trading is thus a form of civil liability which can result in a financial order for a return of funds to the company" (www.streetsweb.co.uk/wrongful%20trading.html)
Fraudulent Trading:-
"Fraudulent trading happens when a company carries on business at a time when there is, to the knowledge of the directors, no reasonable prospect of creditors ever receiving payment. This includes a situation where there are no good grounds for thinking that the company can pay its debts even if the directors think otherwise. The standard is objective"
There is obviously a fine line between them. Basically a director can be convicted of trading wrongfully if they were negligent and did not take steps as soon as they should have reasonably aware. Fraudulent trading is where a director was fully aware and hence was actively defrauding creditors by continuing to trade
Fraudulent trading is a criminal offence but still requires the offending director to make a contribution to company assets.
The problem is that both are hard to prove (and I suspect in TVR's case that Fraudulent trading has not occurred). Furthermore NS may not have been a director at times when it could be deemed that wrongful trading has occurred (if any such trading has occurred) and other directors assets will not stretch very far (particularly given that the above order of payment still stands in such circumstances).
Finally should the administrator/creditors deem that such a conviction could be made it is likely that it would not make commercial sense to pursue it due to legal costs.
Gassing Station | General TVR Stuff & Gossip | Top of Page | What's New | My Stuff