Client in liquidation

[ittony]

I'm a freelance developer working via my own ltd company and I've just received a solicitors' letter informing me that one of my long term clients is going into creditors' voluntary liquidation. They owe my company £20,000. I am invited to submit proof of debt and to vote to approve the appointment of the liquidators and their costs and whether to seek that a liquidation committee be established.

This is a massive blow and leaves my company in a precarious, though solvent, position. I haven't spoken to my client yet and wonder if anyone here has any broad advice?

Some things I'm pondering on:

* Is there any point in objecting to the appointment or seeking to form a committee? Would I be throwing good money after bad in getting my own legal advice which I can barely afford?
* A small proportion of what I'm owed is yet to be invoiced. Can I still add that?
* I've already paid corporation tax on most of the owed amount.
* I'm still incurring costs (low £100s / month) hosting sites I manage for a few of their clients. What do to about that...

[GhostofTarbera]

Have you got ipse+ membership ?


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[Paralytic]

I've gone through something similar on a personal basis, but i'd say the basic facts will remain the same

1) Unless the client has extensives assets than can be realised, assume you'll get nothing back. Liquidators are very good at aligning their costs with what remnants may remain
2) Yes, add your unbilled inovices to the amount outstanding
3) You should be able offset bad debts against CT, but check with your accountant (random link: Bad debts and corporation tax - Article Nottinghamshire : Sunny Accountants)
3) Are you hosting these sites on behalf of clients of your client? If so, I'd contact them and speak to them about them taking over payment (backdated to whatever you think you can get) or you'll pull the plug (legally - take into account that the client is not liquidated yet)

[GhostofTarbera]

I've gone through something similar on a personal basis, but i'd say the basic facts will remain the same

1) Unless the client has extensives assets than can be realised, assume you'll get nothing back. Liquidators are very good at aligning their costs with what remnants may remain

Exactly this, forget any hope of getting any money

Unless, they are relying on your software/support to continue to trade - then demand full payment or take down the sites




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[ittony]

Have you got ipse+ membership ?

No.

[northernladuk]

No.

Unlucky, you could have got 10k of that back.

Business Interruption Terms | IPSE

Why have you allowed your exposure to run up to 20k? Have they had problems paying you up to now or have you kept if very casual to allow them to run up this kind of credit?

Sadly this is probably the case unless you have a better view on the ground so to speak.

1) Unless the client has extensives assets than can be realised, assume you'll get nothing back. Liquidators are very good at aligning their costs with what remnants may remain

Hopefully they can pull something out of the bag for you.

EDIT : How close are you to the business? IMO you need to be finding out where they are going with this. Has the thing collapsed or is there some fancy jiggery pokery going on and they intend to carry on trading somehow. There might be some wiggle room for you to carry on with them and potentially get paid a little something directly from the owners if they really need you to keep the lights on. Long shot I believe we had a thread not that long ago about getting money from the director personally while they re-set up and carried on.

[BlueSharp]

Unlucky, you could have got 10k of that back.

Business Interruption Terms | IPSE

Why have you allowed your exposure to run up to 20k? Have they had problems paying you up to now or have you kept if very casual to allow them to run up this kind of credit?

Sadly this is probably the case unless you have a better view on the ground so to speak.


Hopefully they can pull something out of the bag for you.

Many contractors do it. £500 a day invoice, + 30 day payment terms. You're already £20k in before the first invoice payment is late. And people say we take no financial risk! I always push for bi-weekly invoicing at the very least in this case or limited payment terms.

[ittony]

I've gone through something similar on a personal basis, but i'd say the basic facts will remain the same

1) Unless the client has extensives assets than can be realised, assume you'll get nothing back. Liquidators are very good at aligning their costs with what remnants may remain
2) Yes, add your unbilled inovices to the amount outstanding
3) You should be able offset bad debts against CT, but check with your accountant (random link: Bad debts and corporation tax - Article Nottinghamshire : Sunny Accountants)
3) Are you hosting these sites on behalf of clients of your client? If so, I'd contact them and speak to them about them taking over payment (backdated to whatever you think you can get) or you'll pull the plug (legally - take into account that the client is not liquidated yet)

Thanks. Yes, these are sites which I've developed for their clients. One of which the development itself is substantially unpaid for. Whether that end client has paid my client for the work or not, I don't know.

[northernladuk]

Many contractors do it. £500 a day invoice, + 30 day payment terms. You're already £20k in before the first invoice payment is late. And people say we take no financial risk! I always push for bi-weekly invoicing at the very least in this case or limited payment terms.

Good point well made.

[BrilloPad]

Liquidators are very good at aligning their costs with what remnants may remain

This is very true.

Personally I would like at getting what I can from the client's clients.