Company Insolvency
With all of us feeling the effects of our economy slipping into decline, many are facing the possibility of our workplace being drawn into the growing number of companies becoming insolvent. From small firms collapsing under the strain, to national institutions of companies such as Woolworths closing its shutters; such uncertain times have not been seen for decades. But what is insolvency and what does it mean to you if the company you work for becomes the latest casualty?
What is insolvency?
A company’s basic function is to generate income, cover its costs and aim to create profit. If it reaches a point where it is unable to pay its outgoings then it can experience the beginnings of insolvency. In these recession-hit times this is a common problem as many companies are experiencing a decline in sales and facing situations where they are unable to pay back what they owe. At this point creditors are legally entitled to start the proceedings for insolvency. But how does this affect your rights as an employee?
Where does insolvency leave the employee?
An employee of an insolvent company can face an uncertain future. However there are options available. First of all you must establish what degree of trouble the company is in as this will have an impact on your situation. Insolvency can mean different things depending on the level of debt the company has encountered:
If your employer is insolvent and in the process of rescuing its business then it may come under ownership of a new company. In this instance the employee may be protected and employment in the company can continue.
If your employer is closing its business along with selling its assets and repaying its creditors then the company may be becoming bankrupt and facing liquidisation. In this instance the employee may be not be protected by their employment rights.
Those that are affected by a company closure can be legally entitled a pay out from the National Insurance Fund of up £350 a week. If you are owed more than this, such as holiday pay, it will become a preferential debt when your employer's assets are shared out and will be paid before its larger creditors.
Who can help?
www.insolvency.gov.uk is a government run service that provides detailed information and assistance for all those effected by insolvency.
The Insolvency Service provides a free helpline which offers impartial and clear advice on 0800 074 6918.
Beesley & Company are a leading Company Insolvency specialist who offer advice and support.
Your local Citizens Advice Bureau is also specialised to help. To find your nearest visit www.citizensadvice.org.uk
Go to Features
Add our news to your site
Be the first to comment
Add your comments
Other Features
|
How to Beat the Credit Crunch
How to Beat the Credit Crunch
|
|
|
|
|
UK Mortgage Rates
The UK home mortgage market is one of the more competitive financing industries in the world. The government has been fully supporting UK mortgage borrowers, and the private sector has put forth various mortgage plans and different kinds of UK interest r
|
|
|
|
|
Citizens Advice Bureau
The Citizens Advice Bureau is a registered charity dealing with general complaints and problems. The Citizens Advice Bureau acts to solve problems and disputes including debt advice, housing issues, employment disputes and other legal disputes.
|
|
Articles by Section
