Limited company being run into the ground

worrieduser

Hi All,
I work for a small limited company of about 20 people. Our company has been running for a number of years on purely investor money. We have failed to launch any products and I know we have failed to pay our bills electricity, software licenses, office rent etc for nearly a year now..

All the staff have taken large pay cuts and I fear they are running the company into the ground to the point where I may not even be paid at the end of this month..

What happens if they bankrupt the company? Where do the staff stand?

What can I do if at the end of this week they tell me they ran out of money?

Can they just not pay us and hope we stick around? On the promise investors will be found?

I have a mortgage to pay and not much room to be messed around...
Any answers would be great.

antiskeptic

worrieduser wrote: »

Hi All,
I work for a small limited company of about 20 people. Our company has been running for a number of years on purely investor money. We have failed to launch any products and I know we have failed to pay our bills electricity, software licenses, office rent etc for nearly a year now..

All the staff have taken large pay cuts and I fear they are running the company into the ground to the point where I may not even be paid at the end of this month..

What happens if they bankrupt the company? Where do the staff stand?

What can I do if at the end of this week they tell me they ran out of money?

Can they just not pay us and hope we stick around? On the promise investors will be found?

I have a mortgage to pay and not much room to be messed around...
Any answers would be great.

I'm not too sure what triggers off the receivers coming in. They sound like they are already bankrupt but are holding on .. in the hope that. What could be done is that they lay you off rather than make you redundant. This would permit you to claim benefits without them having to let you go finally. I think that this situation can persist for 13 weeks after which point they either must reinstate you or let you go finally.

I wouldn't work if they weren't paying but would get straight onto welfare (it might take a few weeks before you see any money (which will be backdated to the date of claim). You obviously cannot work for the company if receiving welfare.


It turns out that the employees of a company are pretty well protected in the case of a winding-up of the business. Your wages will be paid out of a public fund with the government clawing back that money from any assets the company has. Ditto for holiday pay due. You'll also get statutory redundancy if qualifying for it. In my case, my company was deducting pension payments from my wages but weren't paying them into the fund - for about a year before they folded. This money too will be reinstated.

I'm sorry for your position - it's a ghastly worry to go through.

Stabshauptmann

On the pensions point, deductions not paid into the fund will only be refunded for the past 18months iirc

pirelli

worrieduser wrote: »

Hi All,
I work for a small limited company of about 20 people. Our company has been running for a number of years on purely investor money. We have failed to launch any products and I know we have failed to pay our bills electricity, software licenses, office rent etc for nearly a year now..

All the staff have taken large pay cuts and I fear they are running the company into the ground to the point where I may not even be paid at the end of this month..

What happens if they bankrupt the company? Where do the staff stand?

What can I do if at the end of this week they tell me they ran out of money?

Can they just not pay us and hope we stick around? On the promise investors will be found?

I have a mortgage to pay and not much room to be messed around...
Any answers would be great.

Is it a bio tech company?

worrieduser

Well my suspensions were right. I was told a couple of days after pay day (pay day never happened!) that due to funding which “should” have come in the company was unable to process wages so they are looking at getting money in from investors by this week so we should be paid by the 12th. That would be my salary for October 2 weeks late... They also said that in the event that all the money didn’t come in we would at least get “some” money this week. (which is the likely outcome)

Is this even legal? I’m probably only going to get half my salary for October... not looking good for November.

We are not paying anything into pensions, we are a small company and it was never started.

They will try and keep everyone working and the company alive but it means we could end up on half salaries and maybe even nothing...

If they eventually get wound up will I be able to claim for salary not paid out to me?

Happy Christmas!

Our man in Havana

If they eventually get wound up will I be able to claim for salary not paid out to me?

You would be able to claim as an unsecured creditor, but the chances of seeing any money would be slim.

Victor

Talk to Revenue and check that tax/PRSI deductions are being paid over.

Its illegal to trade when insolvent.

Stabshauptmann

Haddockman wrote: »

You would be able to claim as an unsecured creditor, but the chances of seeing any money would be slim.

Dont talk through your arse, if you dont know what you are talking about caveat it so that you dont unduely worry readers.

Check if the attahed document has been updated, but I dont think there have been any material changes.

In short, as an earlier poster said, in the case of insolvencies, employees are pretty well protected. Wages owed to you are paid by the government which it then attempts to claw back from the company.

Be advised though that wait times can be quite long.

If you are also entitled to redundancy, the state will pay that too and as above attempt to claw that back from the company. This is claimed via an RP50 form

worrieduser

I tried to look up what makes a company insolvent... it can get complicated! I couldn’t find information that was explicitly for Irish companies . The jist of what i got was a company could be argued that even if they can’t pay salaries, If they have a business plan that shows in the near future they can raise money that counts as being a working business!!

It’s looking like I’m not going to be paid for this month’s work either...

Is it even legal for a company to just not pay you?

Thanks for the guide to insolvency payments, These are not happy times.

If anyone has any good websites around this type of thing I would love to see them.
Cheers,

Jo King

worrieduser wrote: »

The jist of what i got was a company could be argued that even if they can’t pay salaries, If they have a business plan that shows in the near future they can raise money that counts as being a working business!!

It’s looking like I’m not going to be paid for this month’s work either...

Is it even legal for a company to just not pay you?

Thanks for the guide to insolvency payments, These are not happy times.

If anyone has any good websites around this type of thing I would love to see them.
Cheers,

A company is legally insolvent if it cannot make the payments it owes as they fall due. If a company owes wages and cannot pay, it is legally insolvent and continuing to trade amounts to reckless trading. If an employee is not being paid the employee can complain to the Rights Commissioner under the Payment of Wages Acts.

worrieduser

Can anyone point to a definition of what makes an insolvent company in Ireland?

Stabshauptmann

for the purpose of insolvency payments, its in the pdf I supplied, which you implied you read.

Read the damn thing

Jo King

Companies Act 1963
213.—A company may be wound up by the court if—

( a ) the company has by special resolution resolved that the company be wound up by the court;
( b ) default is made in delivering the statutory report to the registrar or in holding the statutory meeting;
( c ) the company does not commence its business within a year from its incorporation or suspends its business for a whole year;
( d ) the number of members is reduced, in the case of a private company, below two, or, in the case of any other company, below seven;
( e ) the company is unable to pay its debts;
( f ) the court is of opinion that it is just and equitable that the company should be wound up;
( g ) the court is satisfied that the company's affairs are being conducted, or the powers of the directors are being exercised, in a manner oppressive to any member or in disregard of his interests as a member and that, despite the existence of an alternative remedy, winding up would be justified in the general circumstances of the case so, however, that the court may dismiss a petition to wind up under this paragraph if it is of opinion that proceedings under section 205 would, in all the circumstances, be more appropriate.




Circumstances in which company deemed to be unable to pay its debts.
214.—A company shall be deemed to be unable to pay its debts—

( a ) if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding £50 then due, has served on the company, by leaving it at the registered office of the company, a demand in writing requiring the company to pay the sum so due, and the company has for 3 weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor; or
( b ) if execution or other process issued on a judgment, decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part; or
( c ) if it is proved to the satisfaction of the court that the company is unable to pay its debts, and in determining whether a company is unable to pay its debts, the court shall take into account the contingent and prospective liabilities of the company.

Carawaystick

Jo King wrote: »

Companies Act 1963

Circumstances in which company deemed to be unable to pay its debts.
214.—A company shall be deemed to be unable to pay its debts—

( a ) if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding £50 then due, has served on the company, by leaving it at the registered office of the company, a demand in writing requiring the company to pay the sum so due, and the company has for 3 weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor; or

Which means if you are owed >50 euros, demand in writing from the company your wages and any pension payments to be made, and there's 3 weeks to get the move on.

Get any personal belongings out of the company as if a liquidator or receiver is called in you will have hassle getting your property back - even a coat or pair of shoes you leave there in case.

littlemac1980

Sounds like a pretty serious situation you're in. I'm sorry to hear about it.

Seems to me, based on the recent discussions, that though you're getting some good advice here, you would be best to speak to a good solicitor at this point.

Judging from what you've said so far, it's inevitable that you eventually will have to seek the assistance of a solicitor, and it might be better to do that sooner rather than later.

In all likelihood the company is insolvent, at least that's the impression I get from what you're explaining, so you should be protected by various European based Workers Protection legislation, in the event that the company has to wind-up.

Also, strictly speaking, it's not legal for them to refuse to pay you your wages, you are contractually entitled to your wages, and can sue for payment of them, however, this might not be the best course of action in the circumstances, and only a fully informed solicitor would be able to advise you as to the best way to proceed.

If you are worried about money, which clearly you are, it's very often the case that a many solicitors will not charge for an initial consultation, and they may be able to give you a good idea of your chances or otherwise based on that meeting. Also, you are entitled to a breakdown of likely costs and rates charged by a solicitor, before they do any work for you.

Hope it works out Ok for you, try to remain positive.

spyderski

OP - You're not the only one in this situation. Basically, you have 2 options - hang on in the hope that it sorts itself out, or leave the company & get another job. Sorry to be blunt, but there's not much point coming on here querying the legality of your situation etc. If you are not happy, what else can you do - you can't force them to pay you if they have no money.
Employees in this situation, of which I am sure there are many, need to understand that most employers are just doing their best to keep things going, hoping that things will get better. If you cant live with this, your options are limited I'm afraid.

Stabshauptmann

I wouldnt bother with a solicitor. If the company goes into liquidation or receivership the Liquidator / Receiver will take care of everything and your solicitor will have no power / only end up costing you money.

Be advised, if you would be entitled to redundancy should the company cease trading, but you choose to leave the company before it is wound down, then you will not receive any redundancy.

In your shoes, I would try rally the other employees and demand to be paid immediately.

littlemac1980

Well there is one great benefit to getting a solicitor at this point. They will be able to look at your contract of employment and tell you exactly what your rights are under such. They will be able to clearly set out what exactly the law is in relation to your problems.

This forum is a useful tool for discussion, but that's all it is. You cannot rely on any advice given here. However, you can rely on your solictor's advice, and they are required to act in your best interests. I'm not saying that anyone here would do otherwise, but the important thing to remember is it isn't possible to give any advice unless all the facts are known. A crucial element of your problem, necessary to determine the appropriate solution, is your contract of employment and the terms contained within.

While I agree with the previous suggestion that you and your fellow co-workers may benefit from a collective approach to the problem, presumably there have already been discussions between you.

It may well be the case, that at this point in time, collective action, such as a strike, may not be in your best interest. Again, all the facts, including all the relevant law, are required to determine if such is the case or not.

shaunsweb

Just a brief addition to the previous post: You could also go to the local Citizen's Advice Bureau who usually have someone on hand to advise on employee rights and where to go in such situations.

I hope things work out for you.