Cheapest way to force a liquidation (creditors/ employees)

LovelyHurling

If a company has outright refused to pay its debts and refused to comply with or respond in any way to court orders, and the directors cannot be traced, what resort to creditors and unpaid employees have to liquidate the company in a way which does not still leave them at a loss.

Say there are a small number of creditors and employees owed a reasonably small amount of money, but large enough to make a difference to each of them respectively. They cannot afford legal assistance in liquidating the company (largely because of having been left out of pocket), is there any way they can receive assistance in liquidating the company?

This company has no assets to speak of. However, liquidating the company would at least ensure that employees got their money.

LovelyHurling

LovelyHurling wrote: »

This company has no assets to speak of. However, liquidating the company would at least ensure that employees got their money.

Apart from the fact that this sentence makes very little sense there is no guarantee that the employees would get anything from a liquidation.

There's no cheap and cheerful method of liquidation really unless it's members voluntary and even that's not cheap really.

If you want to pursue this it would be reasonably complex and would require proper legal advice.

Kosseegan

Send a 21 day letter of demand and then petition the High Court for a wind up.

Kosseegan

Kosseegan wrote: »

Send a 21 day letter of demand and then petition the High Court for a wind up.

It's a little bit more complicated than that.

The Rules of the Superior Courts do lay out the basics of how to do it and the Examiner's office will help to a certain degree but I've never seen a lay litigant do a winding up and for good reason.

Even if they could do it you still need someone to act as liquidator and they likely won't act without a bond guaranteeing their costs so there's no really cheap way to get it done. Also liquidations take over a year to complete on average so it's not a quick fix either.

Delancey

OP - I don't know where you heard that liquidation was a guaranteed way of employees being paid - it isn't.

LovelyHurling

@Delancey, I'm not necessarily of the opinion that liquidation is a 'guaranteed' way of employees being paid, but in this case, yes it is highly likely that the employees would be remunerated via the social insurance fund as provided for under the Protection of Employees (Employers' Insolvency) Acts, 1984 – 2004.

This is usually carried out by the liquidator returning form EIP1 to the Department of Social Protection.

Unfortunately, in this case, the employee(s) in question cannot afford a situation whereby they force in a liquidator. Largely because they haven't been paid their wages.

If the company in question fails to respond in any way to various court orders (based on cases taken by creditors and employees) against the company, is there any chance that the courts would take it upon themselves to see that somebody at least responds to their orders?

I can't imagine they ordinarily just shrug their shoulders at company directors that chuck court orders in the waste paper bin.

LovelyHurling

Deleted User wrote: »

Also liquidations take over a year to complete on average so it's not a quick fix either.

Not a quick fix, but in this case the company assets involve, approximately, a PC and a filofax from one of the directors' parent's basement. Maybe some used stationery. I don't think it would realistically take a year.

ScouseMouse

So where are the assets which will generate the cash to pay everyone?

LovelyHurling

Why, Provisions made by way of the social insurance fund as provided for under the Protection of Employees (Employers' Insolvency) Acts, 1984 – 2004, as mentioned in post number 6 of this very thread.

Delancey

LovelyHurling wrote: »

Why, Provisions made by way of the social insurance fund as provided for under the Protection of Employees (Employers' Insolvency) Acts, 1984 – 2004, as mentioned in post number 6 of this very thread.

Can this fund only be called upon when a company is declared insolvent ? Is there any way to access this fund without trying to get the company wound up ?

LovelyHurling

Not as far as we know

http://www.djei.ie/employment/insolvency/guideinsolvencypayments.pdf

An employer is insolvent for the purposes of the Insolvency Payments Scheme if:

The business is in liquidation
The business is in receivership
The employer is legally bankrupt
The employer has died and the estate is being administered under the relevant legislation
The employer is insolvent under the legislation of another EU Member State.

LovelyHurling

LovelyHurling wrote: »

Not a quick fix, but in this case the company assets involve, approximately, a PC and a filofax from one of the directors' parent's basement. Maybe some used stationery. I don't think it would realistically take a year.

Any liquidator you try and get to do it will want an indemnity against his costs which are normally paid out from the assets realised in the liquidation. Since there are no assets he'll want one from whoever asks him to consent to be a liquidator.

You could possibly try a s.251 order to determine exactly what the assets of the company are to determine if it's worth winding them up but they're pretty rare orders and might not really help in the end.

Even if you did this DIY style, got a liquidator for no fees and used no legal counsel whatsoever it would STILL cost you a certain amount of money as stamp duty needs to be paid on all the necessary filings for the High Court.

Our man in Havana

Which would be a modest sum in all fairness.

Our man in Havana

Our man in Havana wrote: »

Which would be a modest sum in all fairness.

Reasonably, I'm not saying it as a discouragement. More so that somebody will have to take that cost on to themselves. The real cost would come from indemnifying the liquidator but there are ways around that.

LovelyHurling

Deleted User wrote: »

Even if you did this DIY style, got a liquidator for no fees and used no legal counsel whatsoever it would STILL cost you a certain amount of money as stamp duty needs to be paid on all the necessary filings for the High Court.

That's not really a serious concern.

The objective is not to try and force a liquidation fo €0.00, simply a 'cheap' liquidation in the sense that the employees will not end up out of pocket, or will at least end up with something more than small change.

The Insolvency Payments Scheme, which was established to protect employees, is fantastic gesture in principle, it just seems that there has been no consideration that perhaps if employees hasven't been paid, maybe they can't afford these legal fees.

Obviously nobody can give you legal advice here and with good reason but if there are a decent number of employees you might get together and think of how you could address this issue. Many hands make light work after all.

Liquidations aren't cheap and there might be some benefit to sitting down with a solicitor on a "give me a quote" basis and work out the actual cost you'd be facing and then just do the maths and figure out if it's worthwhile or not.

There are some more inventive legal avenues to go after the directors but they are costly and really not something you should consider without a detailed consultation with a company law familiar solicitor.

edanto

Perhaps an enterprising legal person might take on the job of pushing the liquidation for a small up front fee and a later payment from all that benefit from the social insurance fund?

Obviously, they would be able to negotiate a higher fee than if they were being paid risk-free, but if they are confident of their ability to achieve renumeration for the employees, they might take on the risk.

LovelyHurling

Deleted User wrote: »

Obviously nobody can give you legal advice here and with good reason but if there are a decent number of employees you might get together and think of how you could address this issue. Many hands make light work after all.

Part of the problem is that there is only really one employee owed approx €3,000. The other employee (who is elsewhere a creditor of the company) is owed about €500.

I'm not entirely sure the legal fees are going to make a forced liquidation worthwhile in these circumstances, but as the above poster suggested, it is worth asking a solicitor if he might be interested in taking the case on a no foal no fee basis, since the whole affair is reasonably straightforward.

By the way, just to get back to that issue of the company ignoring court orders (circuit court) to pay employees, is there really nothing more to be done about that?

ScouseMouse

This is interesting.

There are circuit court orders for payment, by the company, to the staff.

But the company has no assets. So, surely this is doomed.

Unless you can make the directors personally liable, where can this go?

A sheriff cannot seize goods, as there is nothing there.

Maybe someone legally minded can take it from here?

Milk & Honey

Have you checked www.CRO.ie. Is the company status listed as normal? Are returns still being filed?

dermot_sheehan

Revenue may sometimes be obliging and liquidate a company when there are tax debts, have you contacted the revenue company unit, 9/15 upper o'connel st., dublin 1?

LovelyHurling

dermot_sheehan wrote: »

Revenue may sometimes be obliging and liquidate a company when there are tax debts, have you contacted the revenue company unit, 9/15 upper o'connel st., dublin 1?

Yes, Revenue are investigating non payment of employees' taxes, the absence of any accounts and so on. I'm not sure how long this can take, and understandably Revenue are not in a position to advise third parties on the progress of such investigations.

So yes, I think holding out for some action of the part of Revenue may indeed be the most hopeful route for any progress.

As an aside, there seem to be serious non compliance issues too (in relation to company law: no record keeping, directors using company funds as personal income, no registration of business (trading) names)

And we had hoped that the ODCE/ CRO might liquidate or somehow wind up the company. Unfortunately, and somewhat bizarrely, a member of the investigating unit from the ODCE got back to suggest that this is a "civil matter", and that there was nothing stopping employees from taking a case against the company for breaches of company law.