From my experience as a cynical old beancounter:-
- Customers (or student pilots) are often the last to hear that a company is becoming insolvent
- The directors have to keep everything quiet, as a rumour about insolvency would prevent a financial rescue effort
- Insolvency may have been creeping up for some time, but customers are only aware after the company has ceased trading
- With hindsight, everyone says that the directors should have stopped taking deposits, but they were accepting every bit of money that they could lay their hands on, in order to try & rescue the business
Then once a liquidator has been appointed, the proceeds of the sale of the company's assets has to be distributed in the order specified by the Insolvency Act. The order for this is broadly as follows:-[list=1][*]Liquidator's fees & expenses (of course!)[*]Secured creditors - usually the bank & finance companies who have funded aircraft. These are paid the proceeds of assets over which they hold a charge. Banks often hold a charge over all the company's assets.[*]Preferential creditors - Inland Revenue, Customs & Excise & employees[*]Unsecured creditors - this includes everyone else, including customers who have paid deposits up front[*]Shareholders[/list=1]
In many liquidations, there are only sufficient funds to pay 1 and 2 in full. If any funds do trickle down to 4, unsecured creditors often only get a few pence in the pound of what they are owed.