Reply to: Client in liquidation

[Old Greg]

Contractor mate of mine was in the same position a few years ago. He agreed with the liquidators that he would do the office clearance for free and more than made his debt back on selling the furniture on.

[BlasterBates]

Yes you can submit further claims, perhaps send in the invoice with an explanation.

Unfortunately it is highly unlikely you will get anything. The company has gone into liquidation because it has no money and huge debts, what little is available will be barely enough to pay off the administrators to wind down the company.

[BlueSharp]

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.

Down tools and focus your efforts else where. I would make payment terms cash up front due to a change in credit risk. As for the live sites how is support/hosting paid for these? You may still get paid for this if it keeps revenue coming in for the client entering liquidation. I would turn them off and make it the liquidators problem or reach out to the client and go direct, if there are no contracts I can't see what would stop you.

[northernladuk]

I'm aware this sounds ridiculous but it has always ticked along quite nicely in this fashion, until now. It's also pretty much the way it operates with my other clients.

Always does, until it doesn't.

[WordIsBond]

This is a definite path for you to go down. If they've not paid your client, see if you can stop that from happening and divert the payment your way. Has the development work you've done been handed over or still in progress? If this is development work still in progress, you've got a bit of leverage with them.

Good luck with that. Anything the client's client owes is an asset of the client's, and since there aren't enough assets to go around the liquidators won't let it get away.

If it hasn't been completed and invoiced yet then maybe you can pull something off. Don't count on it.

[ittony]

This is a definite path for you to go down. If they've not paid your client, see if you can stop that from happening and divert the payment your way. Has the development work you've done been handed over or still in progress? If this is development work still in progress, you've got a bit of leverage with them.

You'll also be wanting to check your contract. ie. at what point does work/IP transfer. eg, At point of timesheet signing, at time of payment from the end client to your client, at time of payment to you etc. You want to find out who legally owns the work that has not been paid for. If you still own it, you have some more leverage with the end client.

The site is complete and live, although I have sole access to the source code and database. I wouldn't want to do wrong by the end client if they have fully paid their due mind. Not sure how I'd find that out.

There are no contracts, only emailed or verbal requirements, estimates and invoices. I'm aware this sounds ridiculous but it has always ticked along quite nicely in this fashion, until now. It's also pretty much the way it operates with my other clients.

[Paralytic]

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.

This is a definite path for you to go down. If they've not paid your client, see if you can stop that from happening and divert the payment your way. Has the development work you've done been handed over or still in progress? If this is development work still in progress, you've got a bit of leverage with them.

You'll also be wanting to check your contract. ie. at what point does work/IP transfer. eg, At point of timesheet signing, at time of payment from the end client to your client, at time of payment to you etc. You want to find out who legally owns the work that has not been paid for. If you still own it, you have some more leverage with the end client.

[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.

[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.

[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.

[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.

[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.

[ittony]

Have you got ipse+ membership ?

No.

[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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[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)