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Unpaid invoices when your client is in a director dispute...

Discussion in 'Accounting and Legal' started by Packatrix, Jan 3, 2019.

  1. Packatrix

    Packatrix New Member


    First time posting, but starting to feel from conversations with various advisors that my situation is pretty rare, but just in case there IS anybody here who's been through the same thing, I thought it was worth asking. Apologies in advance for the long read...

    I work as a freelancer as a limited company where it's just me. Started around 7 months ago. An old colleague who has set up a small agency with a 50/50 business partner got in touch, and offered me some work based on my particular skill set - online video. We have email exchanges confirming the work and estimates, but no specific contract(s). I have completed 8 invoice-able jobs for them and their client. They have a contract with another agency, that has a large multinational as one of its clients, and it was this company that my work was ultimately for.

    The first job that was discussed was a large project of around 3 months solid work. This was specced out in April 2018, for delivery by mid July. This project was begun shortly after after my former colleague's agency and their client(s) approved costs. There were no milestones set, and payment was on completion.

    As this project was being worked on, the relationship between the two directors of the agency had begun to sour, and this situation continued to deteriorate over the next few months, mostly unbeknownst to me.

    Other smaller projects came up while the large project was going through feedback and I took these on, and completed them one by one. I was paid on time for the first couple of jobs. However, the ultimate client for the larger job decided to delay the launch of the main 3 month project, and started to increase the scope gradually.

    By August, the situation had become hostile between the two directors, and my 3rd and 4th invoices were overdue, and this was exclusively the result of the second director refusing to clear payment. The client was waiting on some files from me, and I explained that I would only release them if I could get confirmation that I would not only be paid for the outstanding invoices, but that I would receive written confirmation that the larger project (that had resumed) would not be subject to the same delays, and would be paid in full on the basis that the client was satisfied, and that they had paid the Agency in full, including my fee.

    I got that in writing, was paid for my third invoice, and carried on working.

    The final client began to ask for a rebrand of the project, so an additional estimate was created, and the project continued on until the start of November. A fourth invoice for another small job should also have been paid in mid October, but this was also now outstanding.

    Roll on to 30 days past the client approving the project, the agency received their payment in full. So, client happy, agency paid, but no payment for me. The situation is that one director 100% supports my positions. The other refuses to complete payment. Their wrangle with each other has spilled over and as they both have 50%, they're in deadlock. I carried on the work, and completed some more smaller projects for them in the interim because I had that one director's written promise (which turned out to be between their respective lawyers), and that I wished to try and maintain a relationship that had provided me with a large number of jobs in an area that was my specialty.

    When chasing up the outstanding invoices, I have been asked by the hostile director to supply any/all communications between myself, the client and his fellow director, as he seems to be looking for something that would prove his belief that his fellow director was looking to create a new company and take clients with them. He justifies this request as requiring proof that all the costs were sanctioned, and that the client is properly happy with the work and that there isn't a way that the client can come back and demand new changes.

    Given that A) The client approved the project and he has seen emails confirming that they are very happy, and B)that they have paid in full for the work, it's clear that his claims for further 'proof' are unwarranted. On top of that he agreed back in September, via his lawyer to my ex-colleague's lawyer, that subject to client approval and payment, that "there should be no problem in paying (my company)."

    His going back on this commitment, and his unwillingness to engage in meaningful conversation convinced me that I need to begin legal proceedings. I sent a seven day letter before action, and have followed this up with a 21 day statutory demand letter.

    Again, one director is adamant I should be paid, and has supplied her co-director additional communications proving that I not only did the work, but the the associated costs were all signed off by the agency and its client.

    The two directors now seem to be taking each other to court, and I still can't get paid. It has been confirmed to me that there is enough money in their company accounts to cover all that I am owed, plus an outstanding set of bills, plus their individual low level salaries for the last six months with money to spare. My issuance of a statutory demand is not due to thinking that they cannot afford to payment, but that the breakdown in THEIR relationship is the ONLY reason I am not being paid what I am owed.

    So again, apologies for the long read - this might just be me looking for catharsis, but if anybody here has any insight on how this could play out, and whether there's something else I should be doing to try and secure payment, that would be really helpful.

    A lot of lessons have been learned about written contracts, milestone payments etc, but right now it's about the current financial situation and the associated stress. I'm looking to return to full time work ASAP, as our savings are depleting at a terrifying rate. What are my chances of getting what I'm owed?
  2. Lupita

    Lupita Member

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