Redundancy payments when company is insolvent

Is it possible for a sole director to claim redundancy payment without formal liquidation ?

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My Sole director limited company client is unable to continue trading.

Company  is insolvent and cannot afford to pay an liquidator or  redundancy pay to client. No staff.

To make a claim through National Insurance Fund she needs a case number from insolvency practitioner. 

I cannot see any solution to this problem which I suspect is going to be an issue for many of our clients over coming months.

I would be most grateful for advice from members of forum.

Thank you.

 

 

Replies (10)

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By Paul Crowley
23rd Jun 2020 13:37

What was he earning? And is there an employment contract?

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By Tosie
23rd Jun 2020 13:40

Paul Crowley .She was earning £900 a month. I doubt if she had a formal contract. thanks for response

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Replying to Tosie:
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By Paul Crowley
23rd Jun 2020 14:16

That is the problem with all directors.
Would the possible claim be worth paying the liquidation fee? Probably not. I have never suggested it to a client but would be interested any anyone has had success

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Lisa Thomas
By Lisa Thomas - Insolvency Practitioner
23rd Jun 2020 15:19

The only way for an employee to get redundancy where their employer is insolvent and does not enter a formal insolvency process is to go through a tribunal but I wonder if your client may have an issue defending why they have brought about such a claim when they are in control of the Company.

They might be able to do a deal with an IP to pay some Lqn costs from the redundancy monies but will depend on the figures and also The Insolvency services are snaffling funds due to Directors where there is any Directors Loan Account outstanding so this may also be an issue.

Other than that I'm afraid unless they liquidate they will not be able to claim without a successful tribunal application.

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Replying to Insolvency Practitioner:
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By Paul Crowley
23rd Jun 2020 16:07

Much appreciated

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Replying to Insolvency Practitioner:
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By Tosie
23rd Jun 2020 16:17

Thanks very much. Most grateful, I will deliver bad news to client.

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Replying to Tosie:
Lisa Thomas
By Lisa Thomas - Insolvency Practitioner
23rd Jun 2020 17:25

I think I may have spoken to them this afternoon...

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Lisa Thomas
By Lisa Thomas - Insolvency Practitioner
23rd Jun 2020 16:14

One other thought would be for the Director to cover the costs personally by paying in instalments overtime which would give them some breathing space.

The IP will probably want a deposit upfront.

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By bernard michael
24th Jun 2020 09:51

Did the client claim furlough grant ???

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Replying to bernard michael:
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By Tosie
24th Jun 2020 21:51

No. Sadly they had ceased trading in February . They also missed the business rates grant.

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