Peter, a director of a small building company approached Debtfocus with debts in excess of £170,000 mainly to HM Revenue and Customs. He had built up his company over a period of 5 years but the recent recession had hit hard and he was unable to maintain his payments to supplies and in particular the Corporation Tax/ VAT and PAYE that was due.
Peter now finds that he is unable to continue to support the company from his own funds and there are no funds left to pay the employees who were expecting payment the day after. Furthermore, bailiffs are knocking on the door demanding payments.
After an initial consultation with Debtfocus, it was evident that the company could not continue to trade at even a break-even point.
Restructuring of the company was not practical as the work just wasn’t there and there was a 5 year lease remaining on the trade premises at a huge cost of £2,000 per month from when times were good.
Therefore, advice was given by Debtfocus to cease trading immediately. Debtfocus assisted the director in the unenviable position of having to inform all staff of the redundancies and the doors were closed. Agents were employed to sell the company assets and the director found alternative employment.
Employees were delighted to learn that under the provisions of the Employment Rights Act 1996 they would receive their entitlement for wages, holiday pay, pay in lieu of notice and redundancy up to certain limits. The director was also able to make a claim! The bailiffs were stopped from taking assets and the Liquidator was appointed to deal with all creditor claims and assets of the company. The director had given no personal guarantees and as such the debts of the company including the leased property were dealt with by the Liquidator.