Re: FN-FORUM: Recievership

date posted 1st May 2006 17:47

That being the case, did they instruct services in the knowledge they would
not be able to pay? If so, that's fraud. If you're of a mind to do so you
can leverage that to your advantage. Depends on how friendly or brutal your
inclination.

Forgive me for saying so, but what you describe of your situation
(eggs/baskets) display a classic error in business architecture.

All businesses, whether offering products or services, should structure for
regular income. With products this is relatively easy, for one can work
harder in the marketplace to sell wares. With services, it is a little more
difficult, especially to the inexperienced.

Service providers, including developers, are well advised to build their
business structure around regular income.

Say, for instance, you have a total website build worth £5,000. It's better
to charge £3,000 for build and installation then a code hire or maintenance
fee of £100 per month (equalling £2,400 over two years). I have a slightly
different structure and others' methods will differ according to
circumstances. But if you build the number of regular monthly payments then
there's little can damage you when debtors don't cough up. There's added
advantages too - for the more clients paying you monthly, the more there is
of a recommendation base; banks, seeing a wise business approach, can more
easily be utilised (including bank charge reduction); and it's possible to
live free of constant financial niggles most business managers have, thus
feeling better in stature and more self confident.

Conversely, website developers receiving contract fees tend to spend
according to lump sums received. There's always that latest system to get -
and always the danger from things going wrong such as reduction in business,
court cases, employment tribunals, and the other mish-mash of bloody
nuisances forever ready to gobble up all those good efforts of the past.

Mike A.

Creative Digital Alliance wrote:
> Thanks very much for your time Mike, I guess I had too many eggs in a
> basket. The worst part about it is they always paid very late, so I
> had no idea this was happening. I'll get the letter out ASAP as
> suggested, but as I feared, looks like I'm pretty stuffed even if
> they do pay eventually, as the bills are stacking up now.
>
> Fingers crossed for that big job to come up and make it all alright!
>
> Paul
>
> On 1 May 2006 13:45:53 -0000, Mike A [EMAIL REMOVED]
> wrote:
>>
>> The receiver should have sent you a standard letter and form for you
>> to respond with. It is imperative that you quickly return completed
>> details, certainly within 28 days.
>>
>> It is a good idea to set out in an accompanying note a breakdown of
>> your debt. This will fall into two parts: already invoiced and
>> un-invoiced. Already invoiced items are straight forward. Many
>> creditors, though, forget to apply what they have not yet invoiced
>> for. Do this in detail, billing for Work In Progress and done. Also,
>> if your work is contracted for a particular amount, set out a
>> statement of the proportion of work not yet done but contracted,
>> providing a note of why you want to charge that amount and your
>> potential to sue in court for it. Add further explanation that you
>> would prefer to fulfil the contract and seek a note from the
>> receiver that they will allow the contract to be completed. This
>> generally means that they, not the firm in receivership, become
>> liable for final payment.
>>
>> Once you have added the two sets of accounts together (already
>> invoiced and other stuff) add 8% interest in terms of the Late
>> Payment of Commercial Debts (Interest) Act 1998
>> (http://www.opsi.gov.uk/ACTS/acts1998/19980020.htm), setting out a
>> note when each element of interest starts to run (28 days after
>> payment of invoices already raised, and 28 days after the date you
>> make the claim for the remainder of the contract). Let the receiver
>> sort out whether the interest can be applied in this particular case.
>>
>> The reason for adding interest is twofold. First, it protects your
>> interests should this matter run on a long time, and in any
>> creditors arrangement will give you a higher return. Creditors
>> arrangements are sometimes made to pay in proportion of the total
>> debt of the firm in receivership or liquidation (say 70%). Second,
>> and more important, is that it may heighten your rank for payment.
>> What does this mean?
>>
>> A receivership is not a liquidation. It is a formal method of
>> ascertaining whether the firm is in fact insolvent. It is often the
>> case that the firm continues trading, either directly or as the
>> result of a bargain which in effect wipes away the old business and
>> allows trade to continue under another firms name. In that scenario
>> it is in the interests of the bargaining party to get rid of your
>> debt before others. In receivership liquidation prior ranking
>> creditors will take their money first: the Inland Revenue and those
>> with charges over the assets (usually banks) coming first. You need
>> to rank as high as possible after that. Following, in general terms,
>> what I have set out above will assist achieve this objective.
>>
>> As for your chances of getting paid, you will have to see what the
>> receivers come up with as a final statement of accounts. You will
>> probably receive a percentage of your money. How long? It will
>> certainly take months, for the final result must be approved by a
>> court if it all goes into liquidation. If the firm are local you can
>> apply to go on the creditors committee if one comes about, thus
>> getting a handle on events. It's also useful for learning what
>> really happens, from which you can perhaps structure future
>> agreements to protect yourself from such situations.
>>
>> You may care to Google for further feedback.
>>
>> Bottom line? Adjust your mind to accepting this may be a write off.
>> By doing so and recovering from it you will have a welcome bonus if
>> at some stage in the future you get a payment. Also, to assist that
>> recovery, get in with receivers and other creditors to take Web work
>> from them - for what's lost on the swings...!
>>
>> HTH.
>>
>> Mike A.
>>
>>
>>
>> Creative Digital Alliance wrote:
>>> Hi al,
>>>
>>> Got a letter friday telling me my main client has gone into
>>> recievership, and to let the recievers know how much they owe me,
>>> (quite a lot, approx 8k!). What are my chances of getting paid, and
>>> how long can I expect to wait to learn the outcome, anyone know?
>>>
>>> Regards,
>>>
>>> Paul
>>> --
>>> Creative Digital Alliance
>>> Tel: 0700 596 4491
>>> http://www.CreativeDigitalAlliance.Co.Uk
>>
>>
>>
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