Administration, trading and insolvency
Discussion
Hello,
Last week the company which owns my employer went into administration, details below:
Parent company = Rainbow
Subsidiary companies = Freddy, Bungle and Zippy.
Rainbow, Freddy and Bungle are in administration
Zippy isn't in administration, I work for Zippy.
Bungle handles it's own payroll and the payroll for Freddy and Zippy.
Staff employees of Bungle and Zippy are owed August salary.
Employees of Bungle and Zippy are still working.
The directors (same lot for entire Rainbow alliance) have said that when Bungle receives funds they will get sufficient released to pay the August salary to the employees of Zippy.
Nothing has been mentioned about September's salary so far.
NONE of this has been put in writing.
I have emailed a letter outlining that I consider this to be breach of contract and listing what I am owed (salary and expenses) as advised by HR specialist and ACAS. I requested payment within seven days of letter date and confirmation that the letter has been received - no confirmation or reply has been forthcoming.
Questions:
Does Zippy still trading but not having finance to cover it's debts constitute "trading while insolvent"?
What should I do next?
Edited for typos.
Last week the company which owns my employer went into administration, details below:
Parent company = Rainbow
Subsidiary companies = Freddy, Bungle and Zippy.
Rainbow, Freddy and Bungle are in administration
Zippy isn't in administration, I work for Zippy.
Bungle handles it's own payroll and the payroll for Freddy and Zippy.
Staff employees of Bungle and Zippy are owed August salary.
Employees of Bungle and Zippy are still working.
The directors (same lot for entire Rainbow alliance) have said that when Bungle receives funds they will get sufficient released to pay the August salary to the employees of Zippy.
Nothing has been mentioned about September's salary so far.
NONE of this has been put in writing.
I have emailed a letter outlining that I consider this to be breach of contract and listing what I am owed (salary and expenses) as advised by HR specialist and ACAS. I requested payment within seven days of letter date and confirmation that the letter has been received - no confirmation or reply has been forthcoming.
Questions:
Does Zippy still trading but not having finance to cover it's debts constitute "trading while insolvent"?
What should I do next?
Edited for typos.
Edited by 100SRV on Tuesday 6th September 19:27
Not an expert, but I've picked up a lot from my old man who was an examiner with the Insolvency Service for 30 years until the government butchered it in the name of austerity a couple of years ago.
Previously I would have advised contacting your local ORs office but now, well who knows what help they will provide, but probably better than nothing and they will likely be interested in any 'intelligence' you can give them. Disgruntled employees are good source of information to prosecute crooked directors.
Employees are a preferred creditor and should be amongst those paid first. If you are not paid the government will pay you including any redundancy owed if the company is wound up. So don't need to jump if you don't have to to something safe. In theory you could still claim for unfair constructive dismissal over not getting paid, but would need to construct the case.
https://www.gov.uk/your-rights-if-your-employer-is...
Administration and Insolvency are not the same thing.
The key thing about insolvency is not being able to pay your debts as they fall due. Poor cash flow doesn't excuse that, so if the company is owed enough money to cover its debts, but not yet received it, they can still be insolvent. So yes it does sound like they are insolvent. That doesn't mean they are not viable.
The idea is Administration is to try to help viable companies avoid compulsory winding up if they become insolvent but are otherwise viable.
The directors are not legally in charge of the company once it enters into Administration. The Administrator is and all legal claims should be sent to them. They should also have identified themselves to all creditors including employees. Some Administrators are crooked and help directors phoenix companies to escape debts and some are simply incompetent and not effectively regulated.
Paying other creditors while money is still owed to preferred creditors is illegal and can result in jail time for directors. This and failing to keep adequate accounts was were my old man got many of his successful prosecutions.
https://www.gov.uk/government/organisations/insolv...
Previously I would have advised contacting your local ORs office but now, well who knows what help they will provide, but probably better than nothing and they will likely be interested in any 'intelligence' you can give them. Disgruntled employees are good source of information to prosecute crooked directors.
Employees are a preferred creditor and should be amongst those paid first. If you are not paid the government will pay you including any redundancy owed if the company is wound up. So don't need to jump if you don't have to to something safe. In theory you could still claim for unfair constructive dismissal over not getting paid, but would need to construct the case.
https://www.gov.uk/your-rights-if-your-employer-is...
Administration and Insolvency are not the same thing.
The key thing about insolvency is not being able to pay your debts as they fall due. Poor cash flow doesn't excuse that, so if the company is owed enough money to cover its debts, but not yet received it, they can still be insolvent. So yes it does sound like they are insolvent. That doesn't mean they are not viable.
The idea is Administration is to try to help viable companies avoid compulsory winding up if they become insolvent but are otherwise viable.
The directors are not legally in charge of the company once it enters into Administration. The Administrator is and all legal claims should be sent to them. They should also have identified themselves to all creditors including employees. Some Administrators are crooked and help directors phoenix companies to escape debts and some are simply incompetent and not effectively regulated.
Paying other creditors while money is still owed to preferred creditors is illegal and can result in jail time for directors. This and failing to keep adequate accounts was were my old man got many of his successful prosecutions.
https://www.gov.uk/government/organisations/insolv...
Edited by 4x4Tyke on Wednesday 7th September 20:44
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