How can I get money I am owed from a UK based employer going bust?
March 16, 2008 6:52 PM Subscribe
The UK based company I have been working for is going under (I am in the US... I was hired as their Los Angeles based Art Director last November.) They never got the US corporation together so I was always payed as a contractor, month to month, for which I had to invoice them, always with the promise that as soon as they got the US corporation established I would get my pay as a salary with benefits like health insurance.
The only binding agreement I had with them was a signed offer letter which set my yearly salary, bonus terms and equity. Without any warning last week they told all their employees (and contract workers like me) that they were out of funding, after they had assured us that the company was fine financially until the end of March, so no one has been paid for February or any of March. So they owe me a lot of money for work I've already done. There is talk now of restructuring the company with an "insolvency practitioner" and doing a CVA (Company Voluntary Arrangement,) all British terms that I am unfamiliar with. I know it is something like bankruptcy. Does anybody know anything about this? Is there any way I can stake my claim so that if this does happen, I am at least in line to get some or all of what is owed to me? Is there something I should be filing, and if so with whom? I am still officially working for them (even though I haven't been doing any work since this whole debacle began about a week ago... there is nothing to do) because I haven't quit and I haven't been officially let go. Can anybody help?
The only binding agreement I had with them was a signed offer letter which set my yearly salary, bonus terms and equity. Without any warning last week they told all their employees (and contract workers like me) that they were out of funding, after they had assured us that the company was fine financially until the end of March, so no one has been paid for February or any of March. So they owe me a lot of money for work I've already done. There is talk now of restructuring the company with an "insolvency practitioner" and doing a CVA (Company Voluntary Arrangement,) all British terms that I am unfamiliar with. I know it is something like bankruptcy. Does anybody know anything about this? Is there any way I can stake my claim so that if this does happen, I am at least in line to get some or all of what is owed to me? Is there something I should be filing, and if so with whom? I am still officially working for them (even though I haven't been doing any work since this whole debacle began about a week ago... there is nothing to do) because I haven't quit and I haven't been officially let go. Can anybody help?
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The company may be able to save itself if 50% of its shareholders and -- critically -- 75% of its creditors agree not to push it into liquidation. This "company voluntary agreement" is similar to Chapter Seven bankruptcy - it provides temporary protection to the company from the people it owes money to.
You are one of those creditors. The company is legally required to tell you who it's appointing as its "insolvency practitioner" (IP). I would strongly advise you to contact that individual/entity immediately, outlining how much you're owed with your invoice references as evidence.
I should mention that if the company's intention to get a CVA agreement fails, then it's over, and chances are you'll get either nothing or a few percent of your outstanding invoice amounts, because liquidators work for whoever called them in, and it wasn't you.
Talk to the IP and find out what the basis is of the company's claim to still have a going concern. If this is "just" a cash flow thing, the company may indeed recover. If it's more serious, and you think the company is indeed screwed, then take advice on what other options you might have other than to vote "yes" when you're asked your opinion.
In any case, you need a new job, I'm afraid. This isn't going to wrap up for another couple of months either way.
posted by genghis at 7:38 PM on March 16, 2008