Contractors rights after company liquidation

Ste_D

Hi, I am wondering if anyone can give me any advice on something that I have gone through over the last few weeks.

I was working with a company as a contract software developer. There were 2 contractors on site, and a few weeks back the CEO called us into his office and told us that the company was being forced into liquidation and that we could go home. We were both owed about 5 weeks wages.

A liquidator was appointed and they have since sold the company. However I was informed this week that "unfortunately no funds are being made available to pay unsecured creditors".

What I dont understand is how the company is still in existence but suddenly their debts are forgotten about.

Can anyone give me information on the liquidation process and if this sort of thing is normal. And also, have I any hope of ever getting anything back from the company?

Thanks in advance!

CIARAN_BOYLE

Are you sure an administrator wasn't appointed rather than a liquidator.

If a liquidator was appointed are you sure the company wasn't wound up and the functional parts of the business sold to pay creditors and you were just to far down the line in terms of claims on the companies assets.

IIRC contractors get their claim in pretty far down the line when a company is being liquidated. I'd assume you get nothing and if you get something down the line its a bonus.

CIARAN_BOYLE

CIARAN_BOYLE wrote: »

Are you sure an administrator wasn't appointed rather than a liquidator.

If a liquidator was appointed are you sure the company wasn't wound up and the functional parts of the business sold to pay creditors and you were just to far down the line in terms of claims on the companies assets.

IIRC contractors get their claim in pretty far down the line when a company is being liquidated. I'd assume you get nothing and if you get something down the line its a bonus.

Unsecured creditors are dead last in the liquidation food chain. They regularly get nothing.

jblack

Are you sure the company has been sold? If the assets have been sold they will be used to meet liabilities in order of priority. I.e employees' wages, Revenue etc.

As a contractor you are very low in the food chain and you may be lucky to get anything. You should attend the creditors' meeting and ask a few questions like, how long have these guys known they were insolvent and what were the reasons they kept trading. If there is something dodge going on there is the possibility (very unlikely) of personal liability attaching to the directors.

As Kayroo said you will be last to receive anything.
If you have equipment on site then I hope you have a good ROT clause in contract or else they may attach to the site and become property of the liquidator to use to pay up-chain creditors.

On a personal note, hard luck - you're not the first and will not be last but it's an awful kick in the teeth at this time. Try not to take it personally and look forward. Resist the temptation to buy a baseball bat..

Delancey

Deleted User wrote: »

Unsecured creditors are dead last in the liquidation food chain. They regularly get nothing.

Regularly get nothing ? I'd go one further and say they usually get nothing.
It is something that is all too common on boards these days - the number of posts from people who have been stiffed as contractors is depressing.

nuac

Yes Subcontractors are in a very weak position.

Feargal Quinn and others proposed some amending legislation before the last GE - I hope some reforms are proposed.

Ste_D

Thanks for the replies guys.

The company definitely had a liquidator appointed and not an administrator. The liquidator has since sold the company (from what I hear there were 4 offers for it) and it is continuing to trade. That is why I was so shocked to be told that they do not intend to pay me. I cant understand how this debt has just vanished.

jblack - I'd be lying if I said the thought hadnt crossed my mind!

CIARAN_BOYLE

Ste_D wrote: »

Thanks for the replies guys.

The company definitely had a liquidator appointed and not an administrator. The liquidator has since sold the company (from what I hear there were 4 offers for it) and it is continuing to trade. That is why I was so shocked to be told that they do not intend to pay me. I cant understand how this debt has just vanished.

jblack - I'd be lying if I said the thought hadnt crossed my mind!

Sounds like the name and assets of the company was sold to a new company and the proceeds of the sale was used to pay creditors in order. Old company was declared bankrupt and unsecured creditors were left with nothing.

Maybe you could do something with your contracts in future to avoid being left with nothing. A friend of mine claims the line 'work done by the contractor remains the property of the contractor untill payment for services is fully made,' if included in the contract means that the work done counts as security. He has not had to test it since he started to include it in his contracts though (he is a contract web developer).

CIARAN_BOYLE

CIARAN_BOYLE wrote: »

Maybe you could do something with your contracts in future to avoid being left with nothing. A friend of mine claims the line 'work done by the contractor remains the property of the contractor untill payment for services is fully made,' if included in the contract means that the work done counts as security. He has not had to test it since he started to include it in his contracts though (he is a contract web developer).

These are called retention of title clauses and they aren't really effective in most cases.

jblack

Construction Contracts Bill 2010
- not relevant here as they apply only to construction contracts and provide for statutory adjudication (provisions are useless as they currently stand) and a right to suspend works for two weeks in the event of non-payment.

-Rot is only useful where your items can be easily identified and separated from the employer's. You'll need a right of re-entry and some other provisions otherwise all you have is a fixed charge over the item that will be void unless registered with the CRO (which I would hazard a guess won't be).