Reply to: Agencies that go bust and fail to pay you

[DirtyDog]

Might be a long shot, but worth asking the client whether they paid the agency. If they didn't they might be willing to pay you directly.

Be very careful of this. If the client has a legal obligation to pay the agency, then that's what they need to do - they can't breach the contract with the agency just because you ask them not to pay what is due.

[SarahL2012]

See if client will pay?

I am sure I'm not alone in being in the situation where I suddenly stopped receiving regular payments of my invoices and after repeated chasing was fobbed-off with a massive sob story of how the agency had enormous cash flow problems but they were being re-financed and I would get paid within a month. Having chased repeatedly via email and phone calls when the time was up I then discovered the agency had done an overnight bunk leaving creditors everywhere. I am now due to go to a creditors hearing next week, probably to be told I will not get anything of the £14,000 they owe me. I am now facing bankruptcy of my own company.I was considering a charge against the sole company director for fraud but my legal advice says it is unlikely to succeed. Anyone been in the same situation and managed to get a result? Please help!!

Might be a long shot, but worth asking the client whether they paid the agency. If they didn't they might be willing to pay you directly.

[Safe Collections]

I would have used any legal insurance you have to get a solicitor to write to the agency demanding the money otherwise they would start insolvency proceedings, not sure that's the correct term. In that way, you may get some money from them before others knock on their doors when it's too late.

As SueEllen states that probably wouldn't have helped. The options would be normal county court claim that takes anywhere between 3-6 months to get to court currently, or spending around £2k to wind the company up (essentially you petition the court to force the company into insolvency).

The problem with the latter is your average agent has nothing of any real value in the business so you could easily just increase your losses.

Is there an explanation why this agency has gone bust? It would be interesting to check if the directors have paid themselves nicely out of the company recently... it wouldn't be the first time.

That will be explained at the creditors meeting, but it will likely be a case of the company being unable to continue financially and nothing further. The fact is the directors could have been plundering thousands of pounds a week from the company coffers but as long as HMRC have been paid they are unlikely to ever be banned as a director.

Even if they get banned, you just start up again with your wife as director and off you go...

The current limited liability system in this country is far to open to abuse in our opinion.

[SueEllen]

I would have used any legal insurance you have to get a solicitor to write to the agency demanding the money otherwise they would start insolvency proceedings, not sure that's the correct term.

That wouldn't have helped - court cases take months to sort out.

The only thing that would have helped is to walk out once a payment is late explaining to the client why you have walked off-site.

If you are giving a company a lot of credit i.e. 30 day payment terms on monthly invoicing then you need to be prepared to walk out immediately a payment is a couple of days over due.

[masonryan]

I would have used any legal insurance you have to get a solicitor to write to the agency demanding the money otherwise they would start insolvency proceedings, not sure that's the correct term. In that way, you may get some money from them before others knock on their doors when it's too late.

Is there an explanation why this agency has gone bust? It would be interesting to check if the directors have paid themselves nicely out of the company recently... it wouldn't be the first time.

[v8gaz]

Remind us all what the maximum compensation under that scheme is, v8gaz. Just for laughs.

Boo

7,500 more than he's getting now. Hilarious, eh?

[Safe Collections]

I am sure I'm not alone in being in the situation where I suddenly stopped receiving regular payments of my invoices and after repeated chasing was fobbed-off with a massive sob story of how the agency had enormous cash flow problems but they were being re-financed and I would get paid within a month. Having chased repeatedly via email and phone calls when the time was up I then discovered the agency had done an overnight bunk leaving creditors everywhere. I am now due to go to a creditors hearing next week, probably to be told I will not get anything of the £14,000 they owe me. I am now facing bankruptcy of my own company.I was considering a charge against the sole company director for fraud but my legal advice says it is unlikely to succeed. Anyone been in the same situation and managed to get a result? Please help!!

So just to be clear, the agency has now gone into liquidation and a creditors meeting is being called for next week?

Unfortunately in this instance the chances of you recovering any funds are almost nil in our experience

As Craig1 states it is theoretically possible that you might be able to convince the insolvency practitioner overseeing the liquidation that some kind of malfeasance on the part of the director means he is personally liable for the company debts, but again in our experience this outcome is extremely unlikely. In practice all a dodgy director has to say is "I thought I could trade out of it" and that is pretty much that.

Even in cases when HMRC take an interest it rarely results in a director being disqualified or forced into using his own assets to cover losses.

We should also mention that some unscrupulous "collections agents" now target creditors of insolvent businesses making claims that they can make a director liable, in return for a hefty upfront fee. Our advice would be to treat any such claim with extreme caution.

As far as PCG insurance goes, we have unsurprisingly crossed paths with contractors who have needed to use the cover. Whilst it rarely covers the full amount lost, £7.5k at a time like that can make all the difference to some businesses.

So attend the meeting, fill in the forms and make the claim, but don't expect to see any payout and avoid anyone who promises they can help as long as you pay in advance...

[MicrosoftBob]

Really? Whose average are you quoting?

In contractor terms that's definitely middle to senior manager's average rate.



Is the PCG only interested in this type of 'freelancer'?

No some of us are lowly code monkeys

[DirtyDog]

I might be wrong here, so apologies in advance, but isn't it also split across all contractors claiming when an agency goes bust. So it's 7500 max when you are the only one claiming?

I think there used to be an aggregate limit, but looking at it this week, I couldn't see anything that said that any more.

The £7500 is net of VAT losses.

[NickNick]

Picky picky... Calculator and fingers now consigned to the bin...

Anyway, it's £7500 maximum, and it's free for Plus members, and it's to help you out rather than completely safeguard your commercial losses.

I might be wrong here, so apologies in advance, but isn't it also split across all contractors claiming when an agency goes bust. So it's 7500 max when you are the only one claiming?

[malvolio]

In that case can I have one of those calculators that must come from the PCG??

In my reckoning 2 weeks work is 10 days. £7500 divided by 10 makes £750pd. £450 multiplied by 10 makes £4500.

Or am I mistaken in in these things?

Picky picky... Calculator and fingers now consigned to the bin...

Anyway, it's £7500 maximum, and it's free for Plus members, and it's to help you out rather than completely safeguard your commercial losses.

[cojak]

Really? Whose average are you quoting?

In contractor terms that's definitely middle to senior manager's average rate.

£450 a day across the whole industry (not just IT contractors remember) including all those overpaid banking types and IMs? Possibly a little high as an average, but if so it's three weeks (or more) cover rather than two. From memory (always an unreliable tool in my case...) £450 is about the average PCG member's rate, but the level of cover is presumably dependent on the cost of the insurance deal that underpins it



Not at all. Tarbera lives in a parallel universe and only occasionally touches down in ours...

In that case can I have one of those calculators that must come from the PCG??

In my reckoning 2 weeks work is 10 days. £7500 divided by 10 makes £750pd. £450 multiplied by 10 makes £4500.

Or am I mistaken in in these things?

[malvolio]

[QUOTE=cojak;1835852]Really? Whose average are you quoting?

In contractor terms that's definitely middle to senior manager's average rate. [quote]

£450 a day across the whole industry (not just IT contractors remember) including all those overpaid banking types and IMs? Possibly a little high as an average, but if so it's three weeks (or more) cover rather than two. From memory (always an unreliable tool in my case...) £450 is about the average PCG member's rate, but the level of cover is presumably dependent on the cost of the insurance deal that underpins it

Is the PCG only interested in this type of 'freelancer'?

Not at all. Tarbera lives in a parallel universe and only occasionally touches down in ours...

[cojak]

£7500, roughly two weeks for the average gig.

Really? Whose average are you quoting?

In contractor terms that's definitely middle to senior manager's average rate.

hence another £3K from the bill.

All he has lost now is a good night out

Is the PCG only interested in this type of 'freelancer'?

[malvolio]

Remind us all what the maximum compensation under that scheme is, v8gaz. Just for laughs.

Boo

£7500, roughly two weeks for the average gig. Which realistically is about what you should be exposed to at any one time if you can manage it, which you can't if you're on monthly billing of course.

But it's a helping hand, not a lifeline. It's also free.

HTH. BIDI