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Old November 5th, 2008, 04:28 AM   #1
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Company owing me money going into administration

I suspect that the answer to this question is going to be: "You can do nothing," but here goes.
A company that has employed me on a number of occasions and has paid swiftly each time suddenly stopped paying. The rumour mill began to say that the company had gone into administration but my phone calls to them produced nothing but evasion: the accounts department have gone to lunch, in a meeting etc etc. A direct question to the technical guy who was my work contact revealed that there are difficulties and 'in a few days' things will 'become clearer'.
So is there any action I can take to improve my chances of payment? My understanding is that with UK law, the tax people get first bite at the cherry and everyone else gets a proportion of what's left...after a VERY long time.
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Old November 5th, 2008, 06:14 AM   #2
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Don't know the details of UK law but here you'd be in the position of "unsecured creditor" and that puts you all the way down at the bottom of the pile. Taxes comes first, then employee wages and benefit payments owed, then secured creditors such as mortgage holders, then everyone else. Been there several times in my career, never saw a single penny of the money that was owed me. One of the major disadvantages of working as a freelance 'contractor' rather than an employee. There's not much you can do since once they have started the filing process, it would be illegal for them to jump you up in the que and go ahead and pay you the money you're owed before the other creditors. Good luck.
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Old November 5th, 2008, 06:33 AM   #3
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I think that Steve has confirmed what you suspect is true.
The only experience I've had of a bankruptcy recently was a facilities house who held a library of tape masters that I manage. Acting on a advice from a friend who had been in a similar position I arranged for the physical removal of the material before the liquidators took over because if I didn't I could probably wave goodbye to it. I suspect your invoices will have a similar status, as Steve indicates.
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Old November 5th, 2008, 07:19 AM   #4
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Phoenix

Yes, and the galling thing is that the company is to resurrect itself under a very similar name and carry on, without its debts. Except I can't imagine any technician working for them now.
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Old November 5th, 2008, 08:31 AM   #5
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Nick, horrible situation. I feel for you.

Have you turned up on their doorstep? If nothing else, it might at least let you find out what the full situation is.

I came away from a (vaguely) similar situation with a high spec laptop and an unopened copy of Flash MX (as it was then) in lieu of cash for a small job I had done for a client who was then unable to pay me. The guy had ignored my calls and emails for over a week so I drove the 60 miles to his office (actually his home, although I didn't know that until then). After the initial look of horror on his face had worn off he explained that he was going under and that I might as well take the goods as payment in kind as his bank accounts were frozen. No idea whether he was allowed to do that, but that was his problem, not mine!

I'd rather have had the cash but I sold the gear on eBay and ended up making a couple of quid more to cover the petrol used to get to his office.

If you turn up on the doorstep you never know, you may be able to see the boss and agree something off the record with him for when the new company starts up (I wish I could do that with my credit cards). Long shot, but what have you got to lose?

Good luck, Nick. Hope it works out.
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Old November 5th, 2008, 08:37 AM   #6
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Steve: dumb question, did I miss something? Historically wages to employees have been BELOW secured creditors in Canada, in terms of the order of payout. Has that recently changed?
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Old November 5th, 2008, 09:57 AM   #7
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Quote:
Originally Posted by Shaun Roemich View Post
Steve: dumb question, did I miss something? Historically wages to employees have been BELOW secured creditors in Canada, in terms of the order of payout. Has that recently changed?
You may be right. I've had two such situations happen to me, once when I lived in the States and once here in Canada. In the Stateside case, Utah in the late 80's, I and some of my co-workers took it to court to contest whether we were contractors or defacto employees because contractors were definitely unsecured and the last to get paid. It was a fairly substantial amount, around $8000 in my case, and it made a big difference whether one was (in American HR terminology) a W2 employee or a 1099 contractor. I could have sworn regular employees owed back wages were in number 2 position ahead of the secured creditors but it's possible I'm not remembering correctly - I do know for sure contractors were ordinary unsecured creditors and not likely to see a penny. Unfortunately it turned out the court ruled we were not employees and sure enough I never did see any of the money I was owed. In the Canadian case, it was clear that I was not an employee and the amount owed wasn't signifigant in any case so I didn't bother researching it further. I knew the cost of an attorney would be greater than the amount I was owed anyway.
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Old November 5th, 2008, 11:04 AM   #8
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Assuming they haven't gone into receivership, the best thing would be to go in person and don't leave until someone discusses your outstanding invoice. If they're just about to go under, chances are that they don't have any funds, but if they're just having cash flow problems perhaps you can come up with a number of staged payments.

I've had one company going into liquidation owing me money, I just had to write it off. Fortunately, it was only a few hundred pounds, but I know one small company losing 12,000 when a production company went under.

I suspect this will be an increasing problem for the next while.
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Old November 5th, 2008, 11:09 AM   #9
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Although it would be wrong to name the company concerned in this forum, the BECTU magazine has a column each month devoted to naming and shaming non-payers.

Ian, many thanks for the advice and I think that despite my non-confrontational nature I might well have followed your lead in marching up and making a nuisance of myself, if the company were smaller than it is.

It still bloody rankles that these people can get away with it, though.

Oh, Brian I was writing this while you were posting yours. The company in question has gone into administration...I wonder if that is quite the same as going into receivership.

Last edited by Nick Flowers; November 5th, 2008 at 12:01 PM.
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Old November 5th, 2008, 11:51 AM   #10
 
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And this is why I encourge everyone to set up a payment schedule with a written contract BEFORE doing any work for anyone--individual or business.

We ALWAYS require 50% upon signing the contract. Then 30% due the day prior to principle photography--no payment, the job doesn't start. The last 20% is paid upon approval of a proof copy of the finished piece (usually posted online). No payment, all they have is a single copy web copy with an obtrusive watermark. Sometimes a DVD with the same obtrusive watermark.

Under this schedule, we've never lost any money owed us.
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Old November 5th, 2008, 12:03 PM   #11
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Jay, it's nice for you that you are able to do this. But in the labour market over here it just wouldn't do. From time immemorial it's been: you get the phone call, you do the work, you submit your invoice and you wait. Start to haggle about money up front and you're listening to dial tone.
I think that your work is in bigger chunks than mine...I can be working for five different clients in one week.
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Old November 5th, 2008, 12:47 PM   #12
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Originally Posted by Brian Drysdale View Post

I suspect this will be an increasing problem for the next while.
I suspect you're right, which is why Jay's advice is sound.

Any reasonable client should understand and be sympathetic to the fact that in this current economic climate freelancers cannot afford to take risks with cash flow - especially when dealing with smaller, limited liability customers.

I also require between 30% and 50% up front and then staged payments, typically on completion of principal photography and prior to delivery, depending on the value/cost to me/duration of the project. If a client is not able or willing to agree to that then my risk increases and so does the price I quote them. Yes, I've lost opportunities because of this, but very few. Depending on how you put it to them, you can make it sound like a great deal: "Regular price 2500, but if you pay 50% up front it's only 2000!". Doesn't always work, though!

I make a judgment on whether I am even willing to accept the commission if a client cannot agree to a payment up front but this year alone I have made videos for prestigious clients such as IBM, Tesco, Debenhams and New Look, none of who are likely to go down the pan in the immediate future (ha! famous last words!). They would not entertain up front payments but I judged the risk to be worth it, considering the kudos of having them as referenceable clients.

I know it's easier said than done, Nick, and I'm guessing that you might be in a different part of the market to me? Having said that, if you talk to your regular clients in advance and tell them that you are considering introducing these measures until the economy sorts itself out, you never know, they might go along with it. I would also argue that it makes you look more professional than your competitors (but again, I don't know what it is you're doing for your clients, Nick, so I might just be talking rubbish).

Failing all of that, a tin of paint stripper on the bosses Merc is a great way to relieve your frustration (JOKE, before anyone tells me I'm irresponsible).

Best of luck.

Ian . . .
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Old November 5th, 2008, 01:08 PM   #13
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Ah, just seen what you do. I can understand that it might be tough for you to do the up front thing when you're probably dealing with the bigger production houses.

Out of interest have you contacted BECTU and asked for a bad debt form? Might be worth it.
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Old November 5th, 2008, 01:33 PM   #14
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I don't think any UK production companies pay in advance for their freelance crews. Certainly the broadcasters don't.

Production companies themselves commonly get staged payments in order to cover production costs like hiring crews. Although, I heard the other day that ITV (I assume the network) doesn't pay anything until they get delivery of the completed programme, so production companies will either have to borrow or already have their own funds to cover the production costs. Or, perhaps this just happens with programmes commissioned from the large production companies

BECTU can be good in recovering outstanding invoices.
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Old November 5th, 2008, 02:52 PM   #15
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Agreed, Bryan. I am an exception though! I pay my crew half up front and half on the day for which I enjoy reduced rates. But I am a very small production house!
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