A friend of mine has run a business through a Limited Company for many years. It is a small retail business, with 10 employees, some part time. After paying my friend a good wage over the years the company has made very little profit. A nice lifestyle business.
However the landlord has said that the lease will not be renewed, other premises are extremely expensive and difficult to get. My friend was happy to retire/work part time elsewhere. There was no question of insolvency all taxes and expenses of the business would easily be covered. My friend expected to walk away with a little money, a bit less than a years wages.
Then redundancy payments for the staff were mentioned. As many of the staff have been there for years the amount involved is significant, way more that the assets can cover.
My friend is having a big emotional reaction. "I will be bankrupt. I will be arrested"
Can anyone shed any light on this situation. It seems surprising that a modest business which has traded satisfactorily for many years cannot be closed without going insolent, even though it can comfortably cover all its regular costs.
Any advice welcome.
However the landlord has said that the lease will not be renewed, other premises are extremely expensive and difficult to get. My friend was happy to retire/work part time elsewhere. There was no question of insolvency all taxes and expenses of the business would easily be covered. My friend expected to walk away with a little money, a bit less than a years wages.
Then redundancy payments for the staff were mentioned. As many of the staff have been there for years the amount involved is significant, way more that the assets can cover.
My friend is having a big emotional reaction. "I will be bankrupt. I will be arrested"
Can anyone shed any light on this situation. It seems surprising that a modest business which has traded satisfactorily for many years cannot be closed without going insolent, even though it can comfortably cover all its regular costs.
Any advice welcome.