Albany IT contractors out of pocket

An umbrella group is yet to officially tell its IT contractors about its financial status, despite its companies facing administration and a pile of unpaid invoices running into the thousands of pounds.



Newcomers visiting its website to sign up to the umbrella, Albany Group, also receive no clue that at least three of its UK companies are facing administration.



Thought to be the result of having its banking facility withdrawn, the financial troubles at the group ring like a "siren warning" to all other recruiters and workers involved with umbrella companies.



In a statement, Adrian Marlowe, managing director of Lawspeed, added that the recent events at Albany have, regrettably, "damaged the reputation" of the umbrella sector as a whole.



Recruiters, he said, would now actively be checking they have a "fall back position" should the umbrella company they work with fail to pay the worker, or fail outright.



Until yesterday, three Albany Group companies were awaiting the appointment of an administrator - Albany EMEA Ltd, Albany Employment Services Ltd and Albany Management UK Ltd.



However, last night it emerged that a fourth company – Albany Technologies – has become the latest UK company owned by the group to be deemed no longer viable by its directors.



Although details of the decisions are yet to be verified, it is understood that the group directors will not make any payments to individuals or firms owed money by any of the four companies.



As soon as an insolvency practitioner (IP) is appointed, the directors have said the IP will contact all creditors to "respond" to claims for payment of outstanding moneys, including those of unpaid wages.



But a contractor at an umbrella company will normally be an unsecured creditor, not a preferred one, and therefore come "quite low down the pecking order" for monies owed, says Michael Coyle, managing director of Lawdit Solicitors.



This confirms the fears of one affected IT contractor who, having had no communication from Albany, is pessimistic about getting his £8,000 worth of invoices fully paid.



He admitted he didn't chase Albany for payment since the day it became late, adding that he regards the group's decision to call administrators into more than one of its UK companies as another bad sign.



Yet the mere fact that a company is in administration does not necessarily mean that its debts won't eventually be paid in full; they may be, or there may not be.



Legal experts also point out that where there is more than one company in an umbrella group in administration, the position of a contractor will depend on which one of the group's companies they have been working through.



The best placed contractors, then, at Albany, which has eight companies in total, will be those working through the four companies which are not awaiting an administrator, as opposed to the four which are.



Moreover, if their invoices have not already been factored by Albany, and if they have not been paid by the agency/client, then the contractor can ask the umbrella to issue a credit note to the agency/client.



In these circumstances, the agency or client may then be willing to accept a replacement invoice from a new management company engaged by the contractor.



But for now, contractors are still waiting to officially hear from Albany that some of its UK companies are in administration, quite apart from making further requests on the company, a sample of CUK readers' shows.



"The alternative to administration is liquidation, which is worse," Coyle reassured. "The IP's task is to achieve a return for the company's creditors. If it were placed in to liquidation then there would be nothing 'in the pot.'"



Shown a document Albany sent its end-users about its plan to call in administrators, the Professional Contractors Group said it seemed to prove that umbrella companies were "not immune to cash flow problems."



"Contractors should be alert to the early warning signs so that they can react quickly and effectively," added the PCG's head of commercial development Iain McIlwee.



"Contractors directly impacted by this should try to discuss the situation with Albany and their client, but seek also separate legal advice."



However in its note to end-users, Albany said if individuals do contact them, its directors and employees would not be able to provide extra details until the administrator is appointed.



"We feel deeply for those affected," the PCG reflected. "This is a potential risk attached to a convoluted and perhaps oftentimes overly complicated supply chain. Freelancers are in business and not exempt from risk but they can potentially insure against such situations."



If contractors owed money do not get paid for services they have supplied via an umbrella company, then they have two choices, advised Lawdit. Firstly, discuss it with your umbrella company representative and request payment is made.



Secondly, contractors can issue a claim and obtain judgment. "This can sometimes prove an interesting course," said Coyle, "as an early Judgment is something that a company facing administration may not wish to entertain and may pay at once."



At the time of writing, all calls and emails requesting comment from Albany were unreturned.