Freelancing abroad, contracting company just went bankrupt, now what?

October 23, 2015 5:27 AM

Hi, So, I am in an Arabic country, doing freelance work for a rather large European company that (I hear this from an inside source) has just filed for insolvency. I need advice on how to proceed.

I was supposed to be here for 2 weeks giving training; I'm halfway. My plane ticket gives me the option to switch flights.

This company has not yet paid my previous invoice. They owe me quite a lot of money for that invoice, and this job would be that same amount again. I have been trying to get into contact with someone from the European company, but no-one is calling me back.

My plane ticket is paid (by me, I was supposed to get my expenses paid later), and so is the hotel (at least, for the hotel, the deal was that the mother company would pay directly).

My 'inside source' is also working freelance as well, albeit from home, and he has already been told to stop his activities.

I have no experience with this situation. I am tempted to tell them I am getting on a flight back right now if they are unable to give me proof that they have paid my (2 days overdue) invoice from the last job. It's Friday afternoon in Europe and so I think I only have a few hours left to get into contact with them.

Any ideas on what a good course of action would be? Thanks!

posted by Skyanth to Work & Money (9 answers total)

Who is your main (official) point of contact with the company? Who actually hired you, signed off on things, etc.? If anyone at the company has the energy to spare for you today, it's them.

But chances are they won't have that energy, as today is likely incredibly overbooked and chaotic assuming they haven't all left for the weekend anyway. You might be better off talking with attorneys in the jurisdiction that controls your contract (probably wherever their HQ is, unless an EU law puts it in your home country or something.)

Personally, I'd probably stay the two weeks and do what I had previously agreed to do, letting things sort themselves out later. But you haven't said what fabulous things you could be doing next week instead, so.

(In my world, two days late on an invoice is in "I hadn't really noticed" territory, because American companies and governments tend to be 60-day or 90-day payers, or worse, especially with regard to their smallest partners. It's just one of those revolting things you can't do much about.)
posted by SMPA at 6:02 AM on October 23, 2015

it seems that insolvency law in europe is the process of changing. it used to be that european insolvency meant pretty much the end of the company. but there's been a push to introduce something more like the american "chapter 11" approach, where a company can continue trading for some time, with certain conditions. so you may be better off than you expected.

i think that chance, and the likelihood that you're not going to save much by leaving right now, argues for hanging on "just in case". but i am no expert.
posted by andrewcooke at 6:49 AM on October 23, 2015

Best answer: You're worried that you're going to incur expenses during the next week, that will never get paid back because the company will file for bankruptcy. Or better-case scenario, that invoice will get paid but small-fry bills like yours will fall to the bottom of the stack and you won't see payment for 6 months. Worst-case you fly home and by next week there's basically nobody left to submit an invoice to.

They asked you to do 4 weeks worth of work for them. 2 weeks you've submitted and not been paid yet, 1 week you just did, and the last week is upcoming. I have no idea what the legal side of it is, but the social side is that they will try much harder to pay you for all 4 weeks than for a trip you bailed on halfway through (in a self-driven cutting your losses). I'd stay.

On the other hand, I have been on trips that were declared a failure after 4 days, and we cancelled the hotel rebooked the plane and everybody came home because there was no point in continuing to spend money. But it doesn't seem that you are the person to make that decision. Figure out who that person is (or a couple of people who might be qualified decision-makers), and call them incessantly until you get in touch. It would be great to get official instructions from somebody.
posted by aimedwander at 6:56 AM on October 23, 2015 [3 favorites]

What about the people to whom you are giving the training? Are they employees of the company? Have you developed a rapport with them? Have they also come from faraway places? Would you feel ok leaving them in the lurch?

Is your hotel paid for? Are your meals? Other than losing other opportunities to earn money if you stay, is it costing you?

I think you should hold up your end of the agreement and stay the week. At the very least, it gives you the moral high ground.
posted by mareli at 8:55 AM on October 23, 2015

You're kind of in a difficult position. Flying home mid-way through the current contract means you'll have a harder time getting paid for the outstanding invoice, and you'll burn bridges.
posted by Nevin at 9:44 AM on October 23, 2015

Response by poster: Seems like there's a clear consensus here (which is echoed by advice from others). Thanks all, for making me see more clearly, and thanks especially to aimedwander for making me think 'YES YOU UNDERSTAND ME'!
posted by Skyanth at 9:50 AM on October 23, 2015

Response by poster: PS in the meantime I have finally, after hours, gotten hold of someone at the company and they are looking into my situation. Ta.
posted by Skyanth at 9:51 AM on October 23, 2015 [1 favorite]

I have no idea what the legal side of it is, but the social side is that they will try much harder to pay you for all 4 weeks than for a trip you bailed on halfway through (in a self-driven cutting your losses). I'd stay.

This is not sound advice. OP, you need to confirm the company is insolvent and find out what kind of insolvency it is. Have you actually Googled to see what is going on with this company?

There are many kinds of insolvency but fundamentally insolvency "is the state of being unable to pay the money owed." You are a contractor and not an employee; this means you are a creditor. My guess is that you are about to get royally screwed here as one of a very long line of creditors. It is very possible that you will see no money, or only pennies on the dollar, many months from now if assets to cover debt are liquidated by the receivers.

IANAL but my advice is: do not incur additional personal debt for a company you do not know can pay you.
posted by DarlingBri at 11:03 AM on October 23, 2015

A long time ago I had a freelance client who became slower to pay and then went bankrupt, and I was never paid for a month of work. I had suspicions, and looking back, wish I'd bailed earlier. In your case, though, maybe it's a little different. Since they paid for the hotel, does that cover meals etc? What else will you have to be reimbursed for? If you went home early, would you have paying work next week (or how much would you value the time off)? It's obviously a gamble, but as others say it does seem that it might make it more likely you get the other money you're owed. But only if they have it. I got on a list of creditors for my client and never saw a penny.
posted by three_red_balloons at 12:02 PM on October 23, 2015