What happens to the staff when a company goes into administration?

Soldato
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24 Jul 2004
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Devon, UK
Asking this on behalf of my girlfriend, she's been with Woolworths for about 14 months now.

She (and her colleagues) are due to be paid this Friday, and she wants to know if she should expect to be paid, or not. If not, should she carry on going into work?

Also what normally happens to the staff's jobs when this happens to a company?

Sorry for the questions but i'm totally in the dark about this, and she wants some answers. Thanks.
 
Man of Honour
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17 Oct 2002
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Plymouth
Depends on a variety of things. The staff will probably get paid regardless (they are pretty high up the creditors list), but whether her job will go will depend on whether they are trying to sell it as a going concern, whether they choose to keep that store open to liquidate stock and so on.

Best solution, speak to someone at work who knows what's going on, until the administrators announce what their plan of action is, it's hard to know, however, I would advise against not going in to work, as if the business is sold but they want to cut down staff numbers, it will be remembered.
 
Soldato
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17 Jan 2006
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Dundee
Depends on a variety of things. The staff will probably get paid regardless (they are pretty high up the creditors list), but whether her job will go will depend on whether they are trying to sell it as a going concern, whether they choose to keep that store open to liquidate stock and so on.

Best solution, speak to someone at work who knows what's going on, until the administrators announce what their plan of action is, it's hard to know, however, I would advise against not going in to work, as if the business is sold but they want to cut down staff numbers, it will be remembered.


Good advice here.

I'd carry on as normal more or less, but start preparing for the worst just in case it happens. Perhaps time to dig out the CV and give it a brush up.

Hope things work out ok
 
Man of Honour
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Plymouth
Ta Dolph.

So there is a chance she could not get paid?

There is, but employees come high on the creditors list, second only to the insolvency fees themselves.

When all the assets available to unsecured creditors have been realised, the trustee/liquidator will distribute the proceeds in a strict order of priority as follows:

1. The fees and charges of the liquidation/bankruptcy.
2. Debts due to preferential creditors,. These debts are set out in the Insolvency Act 1986 and include wages owed in the four months before the date of the insolvency order and contributions to occupational pension schemes.
3. In company cases, any creditor holding a floating charge over an asset, such as a debenture.
4. All unsecured creditors.
5. Any interest payable on debts.
6. In company cases, the shareholder

http://www.insolvency.gov.uk/guidanceleaflets/guideforcreditors/guideforcreditors.htm

It's worth noting at this point that the company hasn't been forced into administration by a court order, but has been placed into administration by it's owners, which means that things haven't got as bad as they could have done...

Definitely worth updating the CV and starting to job hunt though.
 
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