If your company went bust overnight - hypothetical question

[anonymous-user]

Hi all.

This is a purely hypothetical question - something I was musing about on my lunch break today.

Assume you work for a small-medium company, with a single owner/MD.
You turn up for work one day, the boss comes into the office and says "we've gone bust, there's no money left - you're all out of a job, please leave."

Where do you stand (legally I mean, not "in the car park")?

Does the bankruptcy process look out for the employees and try to get them paid?
Do you have any right to take anything from your offices to cover your unpaid wage (wishful thinking)?
Do you have to respect your original contract with the now "bust" firm (i.e. no working for competitors for 6 months)?

Interested to know how this all would play out.

Thanks

[davepoth]

Wages come close to the top of the queue as far as debts go, so if there's any money left you'll get it. Chances are that with a small company there won't be any money left though, so you'll default to the National Insurance scheme.

http://www.direct.gov.uk/en/Employment/Employees/P...

Notwithstanding that, if there was anything that I could get away with (laptops, mobile phones etc.) I would probably do so.

[loginnametaken]

Just remember that the odds are the bank now own everything so you could be done for theft if you did help yourself. First in line for any money left over is normally HMRC so i wouldnt hold your breath for anyhting to be left.

[-Pete-]

Best form of defence is ATTACK so go pre-emptive and steal all the laptops tomorrow, just in case...

[loginnametaken]

Thats definately safer than waiting and taking on the worlds most trustworthy people.

[HeatonNorris]

Happened to me when I was 16.

It was a little different in that I worked for a company who employed me to sell their products in a department store - I turned up for a Saturday shift and was handed a letter.

Fortunately, the store manager found me another job very quickly.

However, I do remember having to fill out some legal papers in order to claim my unpaid wages - took quite a long time to come through, but I did eventually get what I was owed. (although, it was so long ago, that it was a pittance - my hourly rate was £1.56 / hour!)

[BMR]

My employer went bust last year albeit the writing had been on the wall for quite a while so I already had another job to go to!

My situation was on the Wednesday my boss (the sole director same as OP's case) told me that unfortunately the company had been let down by a payment that was short and my wages wouldn't be getting paid and to not go back in till further notice.

We were all asked in on the Friday then notified the company had went into liquidation.

We had to get our redundancy payments from the Insolvency Service it took about 4 months but this was held up by a lot of financial hoop jumping by the liquidators over a clients terms of contract the company were tied to.

[Ray Luxury-Yacht]

loginnametaken said:

Just remember that the odds are the bank now own everything so you could be done for theft if you did help yourself. First in line for any money left over is normally HMRC so i wouldnt hold your breath for anyhting to be left.

Sadly, as my industry (print) has taken a raping due to online stuff and the recession, I've had a couple of these in recent years. It's not fun.

Fortunately, it's happened each time very soon after my last wage payment - i.e wages have gone in, and a few days later st hit fans.

I've successfully claimed from the Government MOST of my owed wages, but it's been a bit short.

When you're faced with this, it's difficult to give a stuff about legalities of ownership, rights, wrongs, whys and wherefores....so on each occasion, I can report that colleagues have seen fit to procure items from the factory that will fill the hole in what they are owed.

I never did, because as I said, I was lucky to have been recently paid. But some people didn't get their last pay cheque, plus there were one or two 'one man band' contractors who were facing not being paid many thousands owed - so much plundering and liberation of equipment was forthcoming before the Administrators finally arrived at the doors.

No-one ever heard anything further as far as I know.


Yes, legally it's theft. But in the real world, it's livelihoods at stake and so it ends up being 'every man for himself.'

A terrible situation, that nobody enjoyed one bit as you can imagine.

[anonymous-user]

Thanks for the replies all.

I had imagined that in the real world it might be a situation of "anything that isn't nailed down" etc etc. Seems some people's experiences go along with that.

[Eric Mc]

loginnametaken said:

Just remember that the odds are the bank now own everything so you could be done for theft if you did help yourself. First in line for any money left over is normally HMRC so i wouldnt hold your breath for anyhting to be left.

HMRC are not first in line. Indeed, they never were.

They stopped being ranked creditors in 2003.

[98elise]

This happened to my Dad just before pay day. He took his PC, printer, and anything else that wasn't screwed down. He also kept his company car for a month or two.

Some people were also owed loads of expenses.

[Deva Link]

98elise said:

He also kept his company car for a month or two.

I hope he didn't use it - most unlikely the insurance would have been valid.

[Deva Link]

Eric Mc said:

They stopped being ranked creditors in 2003.

At the time that was thought to be a bad thing as it would make them more likely to pile in rather than give a business a chance. Does that seem to have happened in practice?