Crosswords3 mins ago
Redundancy and Bankruptcy
13 Answers
Interesting subject this-a friend of mine is imminently going to be made redundant at the end of Feb and after working for her firm for 20years is going to receive a redundancy payment of nearly 60K (lucky her!!).Anyway last year in Nov she and her husband were declared bankrupt as a result of their business going down the pan.
Now heres the rub-is she obliged to notify the Official Receiver of the impending cash lump sum as she is bankrupt BEFORE being in receipt ? .
Has the OR got the right and/or the ability to ascertain what bank/building accounts she holds and can he determine the value of them?
I know that if she got the cash before the declaration then he would have got his hands on it as obviously it is an asset and would be shared out to her creditors.
Any advice and/or relevant websites that may be of use would be greatly appreciated
Thankyou in advance.
Now heres the rub-is she obliged to notify the Official Receiver of the impending cash lump sum as she is bankrupt BEFORE being in receipt ? .
Has the OR got the right and/or the ability to ascertain what bank/building accounts she holds and can he determine the value of them?
I know that if she got the cash before the declaration then he would have got his hands on it as obviously it is an asset and would be shared out to her creditors.
Any advice and/or relevant websites that may be of use would be greatly appreciated
Thankyou in advance.
Answers
1 to 13 of 13
Best Answer
No best answer has yet been selected by 6RCS27@CW. Once a best answer has been selected, it will be shown here.
For more on marking an answer as the "Best Answer", please visit our FAQ.
-- answer removed --
She'd thus be well-advised to take proper advice on this before the scenario happens.
One way may be to ask the employer to pay it directly into her pension fund. That way she never 'sees' the money until all of this will be over. I do know that this is a method by which one can avoid being liable for income tax on redundancy payments over £30k - so I wonder if it also works for her circumstances.
Of course that does mean that the money is locked up until she retires - at which 25% of it can come back out as cash.
One way may be to ask the employer to pay it directly into her pension fund. That way she never 'sees' the money until all of this will be over. I do know that this is a method by which one can avoid being liable for income tax on redundancy payments over £30k - so I wonder if it also works for her circumstances.
Of course that does mean that the money is locked up until she retires - at which 25% of it can come back out as cash.
-- answer removed --
Yes - as factor says - that has always been the case in the sense that it is part of the pension rules by which HMRC operates. However she would need to establish it is within the rules of here employer's scheme (or personal pension fund).
All I am saying is that she needs to find a legal way of avoiding having the £60k in redundancy payment until the bankrupcy is discharged. Sneaky, perhaps, but nothing more than other tax-avoidance schemes that people get up to.
All I am saying is that she needs to find a legal way of avoiding having the £60k in redundancy payment until the bankrupcy is discharged. Sneaky, perhaps, but nothing more than other tax-avoidance schemes that people get up to.
She needs to be careful.
The Bankruptcy attaches to any assets in which the Debtor has a beneficial interest. She has a beneficial interest in funds going into the pension fund.
Under the redundancy, she is entitled to receive the redundancy payment. If she does not receive it, the Trustee will want to find out why not.
Your friend will say that the employer paid the money to her pension fund.
The Trustee will characterise this as:
"... entered into an arrangement with the intention to prejudice the interest of her creditors."
On that basis, the Trustee might not only get hold of the money, but could also ask the Court to extend the term of the Bankruptcy, and to impose conditions relating to future earnings after the Bankruptcy is discharged.
The Bankruptcy attaches to any assets in which the Debtor has a beneficial interest. She has a beneficial interest in funds going into the pension fund.
Under the redundancy, she is entitled to receive the redundancy payment. If she does not receive it, the Trustee will want to find out why not.
Your friend will say that the employer paid the money to her pension fund.
The Trustee will characterise this as:
"... entered into an arrangement with the intention to prejudice the interest of her creditors."
On that basis, the Trustee might not only get hold of the money, but could also ask the Court to extend the term of the Bankruptcy, and to impose conditions relating to future earnings after the Bankruptcy is discharged.
It is "after acquired property" & she has 21 days to notify the OR of it. The OR then has 42 days to claim it (which they undoubtedly will!). I do not think the idea of putting it into the pension will work because the OR can claim any excessive payments made into a pension scheme.
The only way I can envisage to try to avoid this is to negotiate with the employer to delay the redundancy until after discharge (normally 12 months from the bankruptcy date, but can be sooner if no payments being made to creditors). However, even this may not work - the OR has a power to delay discharge if made aware of a forthcoming payment.
The only way I can envisage to try to avoid this is to negotiate with the employer to delay the redundancy until after discharge (normally 12 months from the bankruptcy date, but can be sooner if no payments being made to creditors). However, even this may not work - the OR has a power to delay discharge if made aware of a forthcoming payment.
1 to 13 of 13
Latest Posts
Quizzes & Puzzles4 mins ago
Quizzes & Puzzles6 mins ago
Business Post Bumper Crossword
Crosswords7 mins ago
ChatterBank30 mins ago
Shopping & Style36 mins ago