Who pays the Directors?

Among the first of many questions asked by directors of a company in financial difficulty is ‘how am I going to pay my staff?’.  With challenging cash flow and depleting available funds, most directors in such situation opt to forego their own salary to pay for their staff.  A noble action indeed, but it is the right one?

When the company eventually goes into liquidation, the government through the Redundancy Payments Service and under the Employment Rights Act scheme protects employees for unpaid wages.  Employees owed unpaid wages, holiday pay, notice pay and redundancy can claim against this scheme and chances are the employees will be paid their entitlement albeit with a few limitations.

For directors, they have the same opportunity to claim.  However, there are more hurdles to overcome before payments are made to them.  In most circumstances, director/owners of liquidated companies tend to have their claim rejected.

As always, help from experience professionals such as ourselves may be the difference between losing out on such a claim and receiving a cheque from the government.

Teesdale has largest increase of personal insolvency

Statistics show that Teesdale had the largest year-on-year increase of individual insolvency this year.

According to the Insolvency Service their research indicated that the reason behind the increase in both forced and voluntary insolvency was due to the knock-on effects of the recession. Even the Citizens advice bureau noted an increase of personal insolvency enquiries coming from the Teesdale area.

The types of insolvency cases have ranged from bankruptcies, debt relief orders and individual voluntary arrangements have all risen over the recent years for the Teesdale area.

According to the Citizens Advice Bureau they expect a further 65% increase on top of the current figures if the trend carries on.

So how can we avoid insolvency? For some the answer may be that it is inevitable, however, with careful forward planning through the use of a personal cash-flow to work out your outgoings and what you have coming in you can put the odds in your favour.

If insolvency is inevitable and it is too late to consider other options then you will want to make sure that you choose a firm that can represent you well and provide you with expert advice to help you get out of the situation as soon as you can. The Citizens Advice Bureau is a fantastic place to start as they provide free advice like ourselves. Although we focus on helping directors and business insolvency, we can always help point you in the right direction and we won't charge you for the time.