My company is insolvent but I cannot afford an insolvency practitioner

It is unavoidable that company liquidation does come with a cost attached. As part of the liquidation procedure, a company’s assets will be sold, or ‘liquidated’, by the appointed insolvency practitioner in order to raise as much money as possible with which to settle the business’s liabilities. Ordinarily liquidation costs are funded as part of this process, with the insolvency practitioner ring-fencing a portion of the money raised to cover their own fees before distributing the remainder amongst the outstanding creditors.

Should this not be possible due to the company having insufficient assets, the director would look to pay these fees from their own personal finances. In some cases, however, this simply may not be possible. Unfortunately if a company is insolvent it goes without saying that there is often very little money going spare, both in the business, and also for the director on a personal level.

 

CFS Redundancy Payments are a very professional company, Caroline who is dealing with our case is friendly, compassionate and very clear in explaining everything during this difficult time. The service we have received has been amazing, Thank you.

 

 

Tina Hill

 

Duties as a director

Despite this, however, if your company is insolvent it is your duty as director to deal with the situation as soon as possible by enlisting the services of a licensed insolvency practitioner. You should not continue trading or engaging in any activity which may worsen the position of your creditors. Once you know your company is insolvent the interests of your creditors must take priority over your own interests in the business; failure to do this could see you being held liable for company debts or even facing disqualification from acting as a director in the future.

Liquidation and director redundancy

If your company has insufficient assets and your personal finances cannot stretch to funding the cost of the liquidation, there may be another way of raising the money.

It is not widely known that company directors are entitled to make a claim for redundancy should their company become insolvent and consequently enter liquidation. However, should you qualify, director redundancy can be used to pay for the closure of your insolvent company. There are certain conditions that you must meet in order to be able to put in a claim.

• You must be on the payroll at your company
• Your company must have been incorporated for at least two years
• You must have worked a minimum of 16 hours per week

If you meet these criteria, there is a very good chance you could claim redundancy once your company is liquidated. The amount you can claim is dependent on a number of factors including your age at the time of redundancy, your salary, and how long you have been registered as an employee of the company.

As well as claiming for redundancy you may also be entitled to receive additional compensation for unpaid holidays, notice pay, and unpaid wages.

Next steps

If you feel you may be eligible to claim director redundancy, call our expert team today on 0161 533 0232. We can conduct a free assessment to determine your eligibility and the amount you may be claim. If we believe you have a claim, your dedicated case handler will take you through the entire process from start to finish and will be there to answer any questions you may have at any stage of the claim. CFS are Authorised and Regulated by the Financial Conduct Authority. Authorisation No 830857. You can check our registration here.