Posted on: Thursday 7th June, 2018
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.
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.
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.
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.
If you feel you may be eligible to claim director redundancy, call our expert team today on 0800 063 9261. 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. RCUK are Authorised and Regulated by the Financial Conduct Authority. Authorisation No 830522. You can check our registration here.