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Hello Sir,
Could you please clarify on the sequence of distribution of assets in a liquidation in relation to wages.
Specifically, taken the order is the same for compulsory or voluntary liquidation, the liquidator will only pay a part of the wages after liquidator costs and fixed charges.
Initially will pay all contributions and social security and then £800 per employee (or 4 months remuneration if this lower).
Only after paying floating charges and specific claims on company assets can pay full amount.If liquidator can only afford to pay 50% of the wages, I assume this will be spread evenly.
At what point directors wages will be paid?
Also what is considered a specific claim over inventory?
Thank you
LeoOnly afford 50% of wages? – Correct, spread evenly
Directors are employees so are subject to the £800 / 4 months rule
Specific claim over inventory? Back in 1978 (?) the case Aluminium Industriie Vaassen v Romalpa Aluminium
The Dutch company sold raw aluminium tin-foil to the British company and, as one of the terms and conditions of sale, stated on the back of the invoice that ‘title to the goods shall not pass until the goods have been paid for in full’
They weren’t and Romalpa went into liquidation. Imagine the liquidator’s astonishment when these Dutch guys turned up and said ‘We’ve come to re-possess the aluminium tin-
foil … it’s ours’!It went to Court (obviously) and the Court agreed that ‘goods sold under reservation of title remain the property of the seller until the sale conditions have been satisfied
Subsequent cases have clarified the issue but that essentially is the story behind ‘a specific claim over inventory’
OK?
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