insolvency, bankruptcy, director disqualification

Company director disqualification
“You can be banned (‘disqualified’) from being a company director if you don’t meet your legal responsibilities.

Anyone can report a company director’s conduct as being ‘unfit’.

‘Unfit conduct’ includes:

allowing a company to continue trading when it can’t pay its debts
not keeping proper company accounting records
not sending accounts and returns to Companies House
not paying tax owed by the company
using company money or assets for personal benefit”
ref: http://www.gov.uk/company-director-disqualification

 

List of disqualified director in last 3 months
https://www.insolvencydirect.bis.gov.uk/IESdatabase/viewdirectorsummary-new-sub.asp

List of disqualified director in last 3 months
https://www.insolvencydirect.bis.gov.uk/IESdatabase/viewdirectorsummary-new-sub.asp

Unfit conduct: Our disqualification and restrictions search facilities
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/354130/DisqualificationandRestrictionsResults.docx
Declaring bankruptcy or being made bankrupt
“Bankruptcy only applies to individuals. Limited companies that can’t pay their creditors are ‘insolvent’ and can face compulsory liquidation.

Overview
To be made bankrupt, a court has to issue a bankruptcy order against you. This can happen for 3 reasons:

you apply to the court if you’re unable to pay your debts and want to declare yourself bankrupt
your creditors (the people you owe money to) apply to make you bankrupt if you owe them £750 or more
an insolvency practitioner applies to make you bankrupt because you broke the terms of your Individual Voluntary Arrangement
Check if you’re eligible to apply for bankruptcy in England or Wales if you live in another country.

What happens when you go bankrupt
Once the court has issued a bankruptcy order:

you’ll receive a copy of the bankruptcy order and may be interviewed about your situation
your assets can be used to pay your debts
you must follow rules called ‘bankruptcy restrictions’
your name and details will be published on a bankruptcy register called the ‘Individual Insolvency Register’
After 12 months you’re usually discharged (released) from your bankruptcy restrictions and debts, although assets that were part of your estate during the bankruptcy period can still be used to pay your debts.

Bankruptcy only applies to individuals. Limited companies that can’t pay their creditors are ‘insolvent’ and can face compulsory liquidation.

Get help and information
Read the following:

the Citizens Advice bankruptcy advice guide
the Money Advice Service’s guide on options for writing off your debt
You can also contact the National Debtline for bankruptcy advice.”
https://www.gov.uk/bankruptcy

Declaring bankruptcy or being made bankrupt
“Your assets will be sold to pay your bankruptcy debts. You have to hand over your assets to the person appointed to manage your bankruptcy. This person is called your ‘trustee’ and can be:

an official receiver – an officer of the bankruptcy court
an insolvency practitioner – an authorised debt specialist
To begin with, the official receiver usually acts as your trustee.

Assets you can keep
You can usually keep:

items needed for your job, eg tools or a vehicle
household items, eg clothing, bedding or furniture
However, you may have to give these items up if they cost more than a reasonable replacement.

Your bank accounts
You must give the official receiver your bank cards, cheque books and credit cards for any accounts you’re no longer allowed to use. This includes any account that was overdrawn on the date you were made bankrupt.

Your accounts will be frozen but your trustee may release:

any money you need urgently, eg to buy food
your partner’s share of any money in a joint account
It’s up to your bank if they allow you to continue using the accounts.

Your pension
Speak to your trustee or read The Insolvency Service’s guide, ‘What will happen to my pension?’

You can get free advice about how to manage your money and how bankruptcy affects your credit rating from Citizens Advice or National Debtline.”
https://www.gov.uk/bankruptcy/your-assets

Protect your limited company from compulsory liquidation
“Your limited company may be liquidated (wound up) if it can’t pay people or organisations (creditors) it owes money to.
Get professional advice from a solicitor or insolvency practitioner.

Your creditors have asked you to pay your debts
When your company owes money the creditors may try to recover the debt by:

getting a court judgment
issuing an official request for payment, called a statutory demand
Dealing with a court judgment

You have 14 days to respond to a court judgment.

Your options are:

paying the debt
reaching an agreement with the creditor to pay the debt in the future, eg by using a Company Voluntary Arrangement
putting your company into administration
challenging the court judgment
Your creditors can apply to the court to have your assets seized by a bailiff or sheriff if you don’t respond to the court judgment. If this happens and the assets aren’t worth enough to pay your debts, your creditors can apply to the court to have your company wound up.

Dealing with a statutory demand

You have 21 days to respond to a statutory demand.

Your creditors can apply to the court to have your company wound up if you don’t deal with the statutory demand.

Your options are:

paying the debt
reaching an agreement with the creditor to pay the debt in the future, eg by using a Company Voluntary Arrangement
putting your company into administration
challenging the statutory demand”
https://www.gov.uk/protecting-company-from-compulsory-liquidation

 

List of people with additional insolvency restrictions for the last 3 months.
https://www.insolvencydirect.bis.gov.uk/IESdatabase/viewbrobrusummary-new-sub.asp

 

Administration – a detailed guide:
“Administration is a mechanism designed to protect a company from its creditors while a restructuring plan is completed. This technique can be very powerful in situations where the company has a very aggressive creditor or creditors and needs to protect itself from them whilst a rescue plan can be worked out. It is not the same as an administrative receivership.

What are the key components of administration?
The company must be a reasonable size, have reasonably predictable cashflow and must be able to predict profitability. There must be an insolvent position or contingently insolvent position. The directors think that a hostile creditor will seriously affect the future trading possibilities,this is often a landlord or the Crown creditors.

The administration process requires a licensed insolvency practitioner (IP) to act as the Administrator appointed by the court. The court appointed Administrator takes over the management of the company and takes responsibility for restructuring the company or business.

If the company has little in the way of assets, poor cashflow and no future then creditors voluntary liquidation is probably more appropriate than administration.

There are two types of application to the High Court. There is the “without court order” appointment route for holders of qualifying floating charges, and companies/directors. This is quick and does not need a court application or hearing.However, sometimes it is still more appropriate to make the second type more detailed application which asks for a court hearing.”
http://www.companyrescue.co.uk/company-administration/detailed-administration

 

“A winding up order is a Court order that forces an insolvent company into compulsory liquidation – a process in which the Court appoints an Official Receiver (OR) to liquidate all of the company’s assets in order to repay creditors. It results when HM Revenue & Customs or another creditor sends a winding up petition (WUP) to the Court after the insolvent company fails to repay a debt of more than £750 within 21 days of being issued a Claim – an official payment request served after a High Court judgment.”
http://www.realbusinessrescue.co.uk/winding-up-petitions/what-is-winding-up-order

Wind up a company that owes you money
“You can apply to the court to ‘wind up’ a company if it can’t pay its debts of more than £750.

Your application to the court is known as a ‘winding-up petition’. If successful, the company will be put into liquidation.

You may not get all or any of the money you’re owed – a debt specialist (eg a solicitor) can help you work out the best way to recover a debt and send your petition.”
ref: https://www.gov.uk/wind-up-a-company-that-owes-you-money/overview

 

Alpari UK in administration
“It was revealed last week that the West Ham sponsor Alpari UK, a spread betting firm, became insolvent after the Swiss National Bank stopped the franc’s peg to the euro. This led to the currency rising in value significantly (to almost 40%) and resulted in Alpari losing millions of dollars.

Despite the company’s attempts to find a suitable buyer and avoid entering administration, yesterday Richard Heis, Samantha Bewick and Mark Firmin from KPMG were appointed to oversee the special administration process and consider all options, including discussions with interested buyers.

Richard Heis, stated “We have had a number of inquiries from interested parties in relation to the company’s business.”

“We will be speaking with these parties and others over the next few days, and hope to secure a deal to preserve the business and jobs as far as possible.”

Alpari holds $98.5 million of client money which the administrators have said will be returned or special arrangements will be made.

The best outcome would be for a buyer to take over the business and secure jobs (there are 170 employees in the London office). The business could be separated, however, if assets are sold to various buyers. In most circumstances, staying in administration for a considerable amount of time can be detrimental to the business so it is in everyone’s best interests if a buyer is found soon.

For all queries, contact alpariukclaims@kpmg.co.uk”
http://www.companyrescue.co.uk/latest-news/alpari-uk-in-administration

Administration Case Studies
http://www.companyrescue.co.uk/company-administration/administration-case-studies

 

Your rights if your employer is insolvent
“What you can get
The money comes from the government’s National Insurance Fund. It’s not guaranteed that you’ll get everything your employer owes you but you can claim for:

redundancy
up to 8 weeks’ wages, including a payment for a protective award for failing to consult collectively
up to 6 weeks’ holiday pay
statutory notice pay – 1 week after 1 month’s service, going up to 1 week per year of service (up to a maximum of 12 weeks)
unpaid pension contributions (your pensions administrator does this for you)
basic award for unfair dismissal
You can claim for statutory notice pay if:

you’ve worked your statutory notice period but not been paid by your employer
you were dismissed without notice
you don’t work your full notice
Your statutory notice period (the minimum legal notice period your employer has to give you) is:

a week’s notice if you’ve been employed for between a month and 2 years
2 weeks’ notice plus an extra week for each year you’ve worked if you’ve been employed for 2 years (this goes up to a maximum of 12 weeks)
Payments are limited to £464 per week.”
https://www.gov.uk/your-rights-if-your-employer-is-insolvent/claiming-money-owed-to-you

 

Facing redundancy
“With the economy in difficulties, redundancies are in the news every day. But even when times are better redundancies happen when firms reorganise or get taken over. This leaflet explains your rights if you are threatened with redundancy and offers some tips for the newly unemployed.”
http://www.tuc.org.uk/sites/default/files/extras/facingredundancy.pdf

 

Redundancy Procedure

Redundancy: your rights
“You’re entitled to a consultation with your employer if you’re being made redundant. This involves speaking to them about:

why you’re being made redundant
any alternatives to redundancy
You can make a claim to an employment tribunal if your employer doesn’t consult properly, eg if they start late, don’t consult properly or don’t consult at all.”
https://www.gov.uk/redundant-your-rights/consultation
Redundancy consultation and procedure
“Redundancy procedure

As good practice employers may wish to consider establishing a formal redundancy procedure which should be negotiated and agreed with trade union or employee representatives. Full and effective consultation when drawing up a redundancy procedure will do much to allay unjustified fears, avoid the suspicion that redundancies are imminent and allow representatives to contribute their views and ideas. This procedure could be incorporated into the company handbook to ensure all employees are aware of it. Failure to follow a reasonable procedure could lead to employees making claims of unfair dismissal.

Depending on the size and nature of the company, the contents of a formal procedure on redundancy would normally contain the following elements:

an introductory statement of intent towards maintaining job security, wherever practicable
details of the consultation arrangements with trade union’s or employee representatives
the measures for minimising or avoiding compulsory redundancies
general guidance on the selection criteria
details of the severance terms
details of any relocation expenses, details of any hardship or appeals procedures
policy on helping redundant employees obtain training or search for alternative work.
Measures for minimising or avoiding compulsory redundancies may include:

natural wastage
restrictions on recruitment
reduction of overtime
seeking applicants for voluntary redundancy.
What information must an employer disclose about proposed redundancies?
To ensure employee representatives can play a useful part in the consultation process over proposed redundancies your employer must disclose certain information in writing including:

reasons for the proposed redundancies
numbers and descriptions of employees affected
proposed method of selecting the employees who may be dismissed
proposed method of carrying out the dismissals, taking account of any agreed procedure, including the period over which the dismissals are to take effect
how redundancy payments, other than the legal minimum, will be calculated.”
http://www.acas.org.uk/index.aspx?articleid=4256
Making staff redundant
“Redundancy consultations
If you don’t consult employees in a redundancy situation, any redundancies you make will almost certainly be unfair and you could be taken to an employment tribunal.

You must follow ‘collective consultation’ rules if you’re making 20 or more employees redundant within any 90-day period at a single establishment.

There are no set rules to follow if there are fewer than 20 redundancies planned, but it’s good practice to fully consult employees and their representatives. An employment tribunal could decide that you’ve dismissed your staff unfairly if you don’t.

Consultation doesn’t have to end in agreement, but it must be carried out with a view to reaching it, including ways of avoiding or reducing the redundancies.”
https://www.gov.uk/staff-redundant/redundancy-consultations

 

 

Redundancy

Performance Improvement Plan
Performance improvement plans: essential information for employees
Legal Advice on Performance Improvement Plans ~ wherever you are in the UK
Weekly Wrap: The Dirty Little Secret Of Performance Improvement Plans