Help please!

[Willy Wonka]

My parents are debating going for an IVA. There is hardly any equity in their house at the moment and have approximately 45k worth of debt. Dad earns 1k a month driving taxis and they have an off licence business. The business is worth about £50k as it stands. This business unfortunately is running at a loss and they dont think they could sell it obviously.

Would they be forced to try to sell this business if they went into an IVA now or could the creditors ask to take half of any profits that were made from the business?

What would normally happen in this situation?

If they transferred the business for free to simply stop loosing money on it, would this affect an IVA adversely? Or would the creditors prefer this to allow them to obtain a higher dividend as my parents would not be forking out for it???

Help please!

[kallis3]

Hello Willy Wonka (love the name by the way!), welcome to the forum.

I am not an expert, but there are a few who post on here. I am sure one will be along shortly to advise you.

[Viki.W]

Hey willy wonka, welcome to the forum. I can't help with your query, sorry, but I just wanted to share with you that I have a business which has been running at a loss for the last few years and it has been valued much higher than I thought. Sometimes, business transfer agents go on the weekly takings, not on the loss it's making. Wouldn't hurt to get a few quotes. Please wait for an expert to help you. Viki X

[Viki.W]

Oh, just wanted to add that I am offering a full and final IVA on with the proceeds of the sale, thay could maybe look at doing that. I missed the bit about it being worth £50k so really they are not classed as insolvent if it could sell for that much. Best speaking to an Insolvency Practitioner. I would recommend Melanie Giles and expert on here, you can get her details from the "meet the experts" page. She's on her hols at the moment but back next week. Viki X

[Willy Wonka]

thanks for the replies, more details to help clarify:

The situation at the moment is that mum and dads montly income is about £1900.

Dad earns about £800 a month self employed driving taxis, there is approximately £1000 a month in benefits (a large carers allowance payment due to little sister being type A diabetic) and approximately £100 a month profit from a business the family runs.

The business has been loosing money badly BUT after huge changes we are confident it can now run at a profit with mum and dad taking approximately £100 a month from the business - we have the accounts to prove this can happen.

SO their personal debt come to approximately £45,000 with a further £2,000 that needs paying from the business.

They have worked out they would have £300 a month spare to pay after expenses.

SO:

1. Would they be accepted do you think?
2. Would they have to sell the business???
3. Would a £20,000 pension payment in 3 years have to be given away OR just half of it as a windfall?
4. Can they include debts from business - mainly ridiculous bill from British Gas (£1300) and a huge accountants bill (who they will be sacking!)
5. If they would not be accepted what amount would they be needing to pay a month to be viable?

ANY help would be greatly appreciated!

Many thanks

[MelanieGiles]

Hi there Willy Wonka

On the face of it they do appear to be eligible to offer an IVA to creditors, but it is likely that the off-licence business would have to be sold or ceased if it is making losses.

Pensions are completely ringfenced in insolvency proceedings, and business debts would need to be included so long as they do not refer to a limited company - which is an entirely separate legal entity.

It would be sensible for them to take advice directly from an insolvency practitioner with experience of dealing with self-employed cases.

[Willy Wonka]

OK thanks for response! No doubt they will be in touch asap.

ONE other 'hypothetical' question.

They have someone willing to take the business off their hands now for nothing. Effectively stopping them loosing money on the business.

If they did this, but still had the debts from the business, COULD they still declare them? And would anyone be questioning them getting rid of it before they went into an IVA? Basically is it legal/will it affect them in the IVA?

Cheers

Willy Wonka

[MelanieGiles]

They must include their business debts, and if they are going to consider a business transfer, they ought to get a professional valuation confirming that the transaction is at proper value.

[Willy Wonka]

The situation has changed slighty so further advice needed!!

There are a couple of business debts now to add to the personal situation BUT the business (due to changes) is no longer running at a loss, it makes them about £100 a month after everything.

If they went into an IVA, would they still have to sell the business, or could they do the IVA with the business debts included and carry on running it, and settle the IVA once/if the business could be sold?

[Viki.W]

Melanie has replied on your other thread.[:)] X