Administrator confirms depths of cash crisis before practice went under
YRM was so cash-strapped in its final few months that it missed PAYE and National Insurance payments to the Inland Revenue and is understood to have stopped paying staff their pensions weeks before it went under.
The firm went into administration last month with just five jobs out of 25 saved by the decision to sell part of it to RMJM. Among those keeping their jobs were chief executive John Clemow and director Iain Macdonald, who have both been made RMJM principals.
Asked whether he needed to apologise, Clemow told BD: “I worked for YRM for 34 years. Of course I’m deeply unhappy about what happened. A business failure is a business failure.”
But former employees, who were owed two months’ wages when they were made redundant, condemned their bosses’ actions. “I’m of the old school,” said one. “I like to think the captain goes down with the ship.”
This week further revelations emerged of the cash crisis which engulfed YRM in its final months, with news that it deducted PAYE and NI payments from employees’ payslips but did not pass them on. Joint administrator Richard Toone, from accountant Chantrey Vellacott DFK, said: “HMRC is owed employee deductions.”
And in a letter sent to the administrator, employees also claim YRM reneged on a so-called pension salary sacrifice deal due to be paid to Standard Life. Under this, employees have part of their salary paid into their pension plan directly by their employer.
One ex-employee said payments stopped after July. “We paid money in good faith and have not been informed by the directors that the monies have not been paid.” Toone confirmed the issue had been raised with him.
A creditors’ report is expected to be published in eight weeks, but Toone admitted it would be months before he could let creditors know how much they would get back.
He said out-of-pocket employees could apply for money under the government’s statutory redundancy payments scheme.
RMJM’s purchase of part of YRM was completed under a prepack — which lets a firm leave its debts with the administrator.
In a letter to ex-YRM employees, the administrator has advised them that they can claim missing money from the government under the Employment Rights Act.
The statutory redundancy payments scheme aims to ensure those who are laid off through no fault of their own receive compensation.
Employees with more than two years’ service are statutorily entitled to a lump sum from their employer, based on age, length of service and contractual earnings up to the current limit of £400 per week.
Joint administrator Richard Toone said the management had tried to sell the whole business in the second half of last year. “But you can’t compel purchasers to prop a business up,” he said.
Toone added that he was asked by YRM to help out at the end of November and said: “I only got involved once all the opportunities had been exhausted.”
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