Chris Laughton, a restructuring and insolvency partner at Mercer & Hole in London, has succeeded to the deputy presidency of INSOL Europe, the European organisation of professionals who specialise in insolvency, bankruptcy and business reconstruction & recovery.

Speaking from Stockholm at the conclusion of INSOL Europe's 2009 annual congress he said "I am delighted to take up this role at a time when restructuring and insolvency professionals are busy across Europe. Experience of cross-border advisory and formal insolvency work - and having local contacts throughout the region - is the key to effective professional practice in this field."

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It depends on:

• how early you react to deal with the problem;
• whether any part of the business is able to continue as a going concern; and
• what workforce is required for that business (remembering that a purchaser may have some positions already covered).

The result can vary:

• no material change if insolvency can be averted quickly;
• some redundancies as part of an operational turnaround, again whilst avoiding formal insolvency; or
• if an insolvency procedure is necessary:
  • some or all of the workforce may be made redundant (leading to enhanced pre-insolvency claims);
  • pre-insolvency claims may receive anything between the modest state-guaranteed limits and full payment; and
  • wages and salaries for employment during insolvency should be paid in full.

This is a highly complex area of insolvency law and practice. Further background reading is available here from Business Link and here from The Insolvency Service.

There is no substitute for consulting a specialist, whose advice will be tailored to your specific circumstances. Most licensed insolvency practitioners, including those at Mercer & Hole, will consider the position with you at an initial meeting without charge.

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