how does applying for IVA affect company director?

[garyk]

i am a company director and own shares in the company. how does applying for an IVA affect this?

[Adam Davies]

Hi
Being a company director will not be affected by an IVA,unlike bankruptcy.
Regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[catullus]

However........ the shares that you own in your company would be considered an asset and would have to be valued for the purposes of the IVA.

Assuming that the company is a private limited company, valuing its shares will not be an easy task because without ready buyers for the shares or a market on which they are priced (the stock market) it is very difficult to value them.

This is a specialist area and you should use anIP who can confirm to you that they will be able to assist you in the valuation. Ensure that this issue is included in the letter of engagement.

It may well be possible to demonstrate that, provided that the business is not performing spectacularly and in the absence of a market for the shares, they are to all intents and purposes worthless and that, in the circumstances, you would pay a nominal value for the shares at the end of the arrangement or, would pay the proceeds in to the IVA, in the event that you sold them during the course of the IVA.

[iva_squirrel]

Hi garyk,

You job wont be affected by an IVA but your shares will have to be sold and this money will have to go into the IVA. But as catullus said this is a specialist area and you IP is the best person to advise you further.

Regards,
Michelle P.

[mikebdomain]

Just my two penneth - If you’re a private limited company, (ltd not plc) surely it's much easier to value your shares as their value will be lodged with Companies House on submission of your annual accounts.

AND

If the shares provide a proportion of your income e.g. dividends, surely it's wiser to retain them to provide an income over the five years, rather than dispose of them in the outset.

Sorry, that this is more of a question than an answer, but being a company director (not considering and IVA, though) I find the subject interesting and hope other experts will be able to clarify the situation further.


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[MelanieGiles]

Good points all round.

Historical accounts are rarely a good indicator of share value, as they are generally filed within the ten month period following the year end - and as most accountants know there are many ways of valuing shares - depending on whether you are buying or selling!

The option of drawing out ongoing dividends and then valuing the shares at the end of the arrangement is generally the most appropriate way of dealing which shareholdings within contributions based IVA's - and IPs supervising such arrangements ought to ensure that they also regularly review the limited company accounts to make sure that monies are not being witheld from creditors within unecessary reserve accounts.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk