What happens if you owe money to a company who goes into liquidation

Soledad

Can someone plese clarify the positon on this for me.

What happens to the clients of a company who goes into liquidation.

If they are half way through a job do they have to finish it?
If there are problems with the job is there any comeback?
If they have some of your products needed to finish a job do they have to supply them?
If you owe money to a firm which goes into liquidation do you have to pay it?

Lplated

Generally speaking, once a company goes into liquidation a liquidator is appointed to wind up the company and its affairs. This involves liquidising/liquidating (turning into cash) all the assets and using the cash to pay the company's debts.

Q1 Most likely not. The company is being wound up. Assuming the job is being done under some kind of contract, one may stand as a creditor to the company in respect of the cost of completing the contract. Answer to this would be very subject/circumstance specific.

Q2 There is an immediate comeback in that one can still pursue a company in liquidation. After that process is over, the answer depends on what happened in the process - for example, if the company was sold as a going concern, that would usually include a provision in respect of future actions/liabilities.

Q3 Answer again would be circumstance specific - i.e. depends what the phrase 'your products' means. Were the products yours to begin with which the company was in possession of? (in which you could seek them back from the liquidator). Were the products those that the company normally traded in? (in which you may be obliged by contract to buy them anyway, or otherwise you could seek to purchase them from the liquidator as part of the process).

Q4 Yes. This is the only question that is not circumstance specific. The liquidator will, in the course of the liquidation, seek to 'cash in' all the assets of the company, this would include debts owing to it.

Trust the above is of some general specific. It is not, of course, legal advice.

Dave!

lol, good post

Victor

Not every company in liquidation is bankrupt. A contract is a contract.