What are Directors entitled to receive in a Creditors' Voluntary Liquidation?
Directors employed by a company entering liquidation are entitled to receive redundancy pay, unpaid wages, holiday and notice pay where the company has insufficient funds to make these payments. Whiteoak Morris provide professional advice to companies facing trading difficulties. When we are instructed to work with directors to place a company into liquidation we ensure the directors and employees can claim their entitlements without delay.
Creditors’ Voluntary Liquidation enables directors to work with an Insolvency Practitioner to manage the process of placing the company into liquidation over a number of weeks, without the need for a winding up order in Court. In the lead up to a Creditors’ Voluntary Liquidation the director and employee claims are collated ready to send to the Redundancy Payments Service on the date of liquidation.
By working with the directors prior to liquidation we ensure the employee claims are ready to be issued to the Redundancy Payments Service on the date of liquidation. This process ensures the employees, including employed directors, receive their entitlements far more quickly than waiting for a court to wind up the company on the application of a creditor.
The Redundancy Payments Service assess the employee claims and make payments directly from the National Insurance Fund. Employee claims are paid by the Redundancy Payments Service in a separate process to the recoveries and payments made by the liquidator. This ensures the employees are paid without delay regardless of the financial position of the company at the point of liquidation.
What are Directors entitled to receive in a Creditors' Voluntary Liquidation?
Directors will need to prove their status as an employee of the company, showing they were not acting as a sub-contractor or purely in an advisory capacity. A formal written contract of employment is not necessary. Employment may be evidenced by confirming their role within the company and showing a pattern of PAYE payments.
Employees of the company, including employed directors, may claim for the following where these entitlements have not been paid in full by the company prior to liquidation:
- Redundancy
- Holiday pay
- Unpaid wages, overtime and commission
- Money that would have been paid while working a notice period (‘statutory notice pay’)
The amount paid by the Redundancy Payments Service is subject to statutory caps but the payments will be paid in the weeks following the liquidation. Any balances in excess of the statutory caps may be claimed from the company in liquidation, however these payments will be dependent on the company in liquidation having funds available to distribute.
Professional advice should be taken when a company is facing trading difficulties. Call 02920 611047 (Cardiff) or 01633 927002 (Newport) today for confidential professional advice from Christopher Whiteoak, our licensed Insolvency Practitioner.