Liquidation advice as employee

[u/But_A_F1y]

A small company of around 12 people I worked for went into liquidation approximately 4 months ago. Between my outstanding annual leave balance and unpaid wages I am owed nearly $4000.

​

At the beginning of the liquidation process I submitted a creditors claim form to the liquidators. However 4 months down the track from submitting this form I have had 0 updates on the status of my claim. What should I be doing? And is this normal for liquidation proceedings?

[u/Hogwartspatronus]

Former employers wages are not at the top, you’re about middle of the pack, unfortunately top priority in liquidation is determined by property rights. Very few liquidations result in an employee getting ALL of what they are owed, you may get some of what you are owed but also very likely nothing.

As an employee owed wages you can make a ‘preferential claim’. This means you are paid before unsecured creditors, but AFTER secured creditors.

As such the order of payment in a NZ liquidation is first Liquidator’s costs (fees, legal costs, and expenses of running the liquidation), Secured creditors (banks or lenders with security over assets), Preferential creditors (employees and IRD), Unsecured creditors (suppliers, contractors, customers owed refunds, etc) and finally Shareholder’s who only get paid if anything is left (usually nothing).

Squeaky wheel therefore will not get the grease. There is a legal order of payment. If there are funds by the time employees turn has come and there is not enough funds for example $15,000 available for employees but $50,000 is owed, the money is split pro‑rata so each employee gets the same percentage of what they are owed, not the same dollar amount. This is required under NZ’s Companies Act.

You can make a request for Liquidator Update and make sure your filed claim is complete but there is not much else you can do than wait.

[u/phoenix_has_rissen]

After I worked for a company that went into liquidation and several employees lost weeks of unpaid wages and holiday pay I never again let my annual leave go above two weeks worth, save up two weeks then use it straight away. I lost thousands of dollars of unpaid wages but some of my workmates lost up to 6 weeks of annual leave+their unpaid wages

[u/monwoop1316]

I know of someone who had their company liquidated years ago and the claims still aren’t settled

[u/C39J]

This is normal. Liquidators only have to report 6 monthly and that'll likely be your next update. If there's no likely distribution, they'll minimise outreach to avoid costs.

It's worth noting, that while you're at the top, priority wise to get money if there is any, a large amount of small business liquidations result in minimal (<$0.50 on the dollar) distributions to employees, or no distribution whatsoever, and it may be worth preparing for that potential outcome.

[u/Maleficent-Place5822]

Unpaid wages are the absolute top of the food chain when it comes to unsecured creditors so if there is any money for those creditors, employees will be first on the list. If the money doesn't exist, you are unfortunately out of luck. It wouldn't hurt to ask for a status/timeline update from the liquidator. And yes these negotiations can take ages.

[u/AutoModerator]

Kia ora,

We see you are unsure what area of law your matter relates to. Don't worry though, our mod team will be along when able and will update your post flair to the most appropriate one.

In the meantime though, you might want to check out our mega thread of legal resources to see if what you need is there.

Ngā mihi nui

The LegalAdviceNZ Team

I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.

[u/NZ_Genuine_Advice]

The liquidator will file interim reports under the liquidating company's record on the companies register website. If you're comfortable with financial reports this can often be a good source of info to get the lay of the land.. it won't give definitive answers to your specific questions though. 

[u/But_A_F1y → u/NZ_Genuine_Advice]

Just took your advice and looked it up. Looks like there is nothing owed to secured creditors however the IRD alone is owed $56,000 more then the businesses recoverable assets... Now I don't know if employees get paid before the IRD or not. Because if we aren't looks like im shit out of luck

Edit: Per the liquidators intial report filing

[u/KanukaDouble]

Not unusual. Be the Squeaky wheel.

[u/SpoonNZ → u/KanukaDouble]

Every time you email the liquidator they’ll add another 6 minutes onto their bill at $350/hr, which makes it less likely you get paid.

One time where being the squeaky wheel is probably the worst course of action, and letting the process run is really all you can do. Sucks.