Going bankrupt

In the world of beer there has been a lot of wailing and gnashing of teeth about companies going bankrupt...and then re-opening immediately free of the debts they had to their suppliers.  I have personal experience of this from the inside so it seems a good time to write down what I can remember.

When I worked as a microbiologist the company I was at went bankrupt and managed to re-open a soon after with a slightly different name doing the same business. It had been obvious the company was not doing well for some time. A big customer had been lost so the work just wasn't there like it once was. When I saw the owners daughter updating her CV on a work computer I thought the company was definitely going under, but despite this it still came as a shock when it finally happened. I'd worked there for years so though intellectually I'd guessed I'd soon be on the sausage it hadn't prepared me emotionally for when reality hit. 

The old laboratory building

I went down the dole office straight away as they only start paying you from when you first tell them you're unemployed. The amount of money you get is pitifully small compared to a wage, so anyone who tells you benefits in this country are generous is an idiot or a liar. And speaking of wages when a company goes so does whatever money you're owed. There is some sort of statutory redundancy payment you'll get but again it was shocking how little it was.

When I found this out it all added to the shock as neither myself nor the owner when he was telling us the company had gone bust had realised quite how shit it was. I had agreed to stay on to finish the work in progress, cultures take a few days to grow so a microbiologists work is usually not something that's can be completed in a single day. When the owner asked us a few days later to stay on longer I did think that was pushing it. We weren't getting paid for the work we'd done or the work we were doing. One of the office people had in fact left immediately. But the boss said there was a chance the company would be bought and not losing customers would help. So I did stay on, it's not like I'd had any other plans. The owner of the industrial estate was not keen on the idea though. I guess he was one of the creditors getting shafted. He was persuaded to allow us to continue even though this was trading whilst insolvent which is definitely dodgy legally. 

The company did get bought, from the receiver though not as a going concern. Which I guess is the "pre-pack" bit that looks so cynical. As I understand it limited companies have their own legal existence so none of the owners were liable for any debts and creditors and the bank got whatever scraps, if any, they could get from the receiver. We stopped working for the old bankrupt company on a Friday and started for the new debt free company in the same premises, doing the same work, on Monday. We all kept our jobs, except the woman who'd stopped working immediately. I don't know how much redundancy money she got. We got paid for the work we'd done. I think all our suppliers continued to supply us, though for six months or so everything had to be paid for by pro-forma. I remember some awkward conversations when I phoned in orders and had to explain that we in fact a new company so any unpaid debts were nothing to do with us. 

The old owner was kept on as managing director but I did get a new immediate boss from the parent company and we did start to get corporate guff coming our way. I successfully used TUPE to not sign the new worse contract though all my co-workers did. Remember you don't have to sign everything put in front of you! See also forms requesting to voluntarily opt out of the 48 hour maximum week. 

How much debt was written off and what the creditors thought of all this I don't know. Though as I'd said apart from lots of pro-formas things carried on as they had before. I don't think any of the suppliers were small enough or owed enough to have their businesses seriously damaged, the thing that causes such upset. It seemed to me that's just how modern capitalism works. Looking up the wiki on limited liability I see that even when it was brought in (1855 in England):

"There was a degree of public and legislative distaste for a limitation of liability, with fears that it would cause a drop in standards of probity"

I seems this distaste continues to this day, and certainly there's a strong suspicion some of the brewery pre-packs have been lacking in probity. 

Personally speaking after the bankruptcy I was less happy with how the company was now run. This in the end lead to me retraining and moving into the brewing industry, which has mostly been a good thing. After I'd gone the lab was sold on and eventually when the lease came up for renewal the site was closed down. In a strange twist of fate a microbiologist made redundant then got a job at the brewery I worked at. And he's still there though I've now gone!