As a company director, you are duty-bound to close your company, or enter into a formal arrangement, if your company is insolvent. Directors will often delay the inevitable because they do not want to let their staff down, but they may be inadvertently making the situation worse.
Staff of a limited company which has gone into liquidation are entitled to claim redundancy pay, notice pay, wages and holiday pay from the Insolvency Service. Many directors are surprised to learn that they too can claim the same redundancy entitlements as their staff.
Spotting the signs of insolvency early improves the chances of the company being suitable for a turnaround procedure, such as a Creditor’s Voluntary Arrangement (CVA), or a Pre-Pack Administration; both of which could help to minimise job losses.
If closing the company is unavoidable, your staff will be better serviced by a winding-up process with the company directors in the driving seat in the form of a voluntary liquidation. A compulsory liquidation, often in the form of a winding-up petition from a creditor, is a devastating blow to company directors and their staff, dragging out the closure and resulting in an extended time of uncertainty.
If you are concerned that your company is insolvent, or heading towards insolvency, act now. Seek professional advice on the options available to offer the best outcome for your company and your staff.