Smith Emmerson Accountants LLP lost an employment tribunal following a disputed redundancy, pushing it into administration.
Partner Paul Emmerson – who bought the firm back as part of a pre-pack deal – explained the two-year tribunal cost the firm £20,000 in legal costs.
"We tried to settle in advance but the employee just wouldn’t agree," he said.
"It gathered momentum to the point where it was an impossible amount of money to pay.
"It’s been a very trying and stressful period, it’s been very fraught.
"It was a big decision to do the pre-pack but I feel it was for the best for clients, creditors and staff."
The firm made three people redundant but, several months later, learnt one of the former employees had filed a complaint to an employment tribunal.
Emmerson insisted the firm had been advised by solicitors with regards to the redundancy but suffered an 'unlucky decision' after the judge ruled it was unfair.
Simon Gwinnutt of Cirrus Professional Services was appointed to handle the administration. The LLP ceased trading on the day he took on the case.
Administrator Gwinnutt explained: "The main reason behind the administration is because of an employment tribunal awarding against the LLP.
"An employee who took the company to a tribunal won a substantial award.
"It was a pre-pack which undoubtedly was the best outcome for the creditors because I do anticipate there will be a dividend.
"The business and assets were sold on the day I was appointed to a company owned andoperated by Emmerson."
The practice continues to operate as Smith Emmerson. The Nottingham-based firm won the 2007/08 AVN Accountants Firm of the Year award for its provision of tax planning services.
It was founded in 1987 by Tim Smith as TJT Smith & Co before Emmerson joined in 1993.
In 2004 Smith Emmerson bought Goldsbrough Associates and JB Pashley & Co – a move which helped the practice double in size by the end of 2006, according to its website.
By Andy Pearce
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