how will my late fathers business affect my IVA?

[nadia.t]

I am currently applying for an IVA. I owe £33,000 of unsecured debts. My father passed away two years ago and had a small business. The company is a limited company and no money is paid out to me from the company although my name is on the business account with abbey national (who are also one of my creditors)as my dad wanted me to be the company director when he passed.

Will this account be affected by the IVA and will the balance in the business bank account be seen as my assets although none of this money can be withdrawn from the account unless it is for the business needs. I work full time but not for my fathers business, for a competely different company.

Will I need to close the account or change it to somewhere who are not a creditor or take my name off of the business account and make my younger sister director? Many thanks

[Viki.W]

Hey Nadia, welcome to the forum. Please wait for an expert to advise you on this. X

[pbeck]

The account will not be affected by the IVA as it relates to a separate entity.

The balance in the account is not your money, it is the company's money, however, if you became the owner of the company's shares upon your father's passing away, then these shares will be seen as a "windfall" which you may be obliged to realise to pay into the IVA. In this circumstance, if the company has value you can't simply give the shares away, but may be obliged to get your shares bought out so that this windfall can be paid into the IVA.

Is the business still running ? Then if so, if it makes any profit, either this can be paid to the director as salary, which could be your sister, this is perfectly OK if she is running it, or alternatively it can be paid as a dividend to the shareholders, if you are one of the shareholders, then you will get the same level of pro-rata dividend as any other shareholder and would be obliged to declare your dividend to your IP.

[Nadia]

The last thing I want is for the account to be affected, basically neither me or my siser gets paid from the business. My mum leaves the money to grow in the account as my sisters are 18 and 14 years old she is saving it for them.

The business is still running and I think we only have one share each in the company. i have another question. My mum gave me some money to pay a cheque for her and a debit card payment. The cheque for for a villa rental she was paying for us all to go on a holiday and the debit card payment was for the flights. (I already owe her money but she didnt want me to miss out on the holiday and thought the break would do me good and she doesnt have a cheque book or debit card.).
She then found a cheaper villa so decided for me to not pay the cheque and leave it in my account until she decided where to rent. As I changed my bank account for the application of the IVA I withdrew the money in cash along with my wages and gave it back to her until I have my new account details through the post then I can pay for the new villa with my cheque book from my new account. My question is that when I send my bank statement to the IP they will see this money and think that I have extra money but it was from my mum. Will I be able to just explain this to them or shall I ask my mum to prepare a letter to say that she had given me this money for the holiday payment.Sorry what a cuffufull.[:X]

The account will not be affected by the IVA as it relates to a separate entity.

The balance in the account is not your money, it is the company's money, however, if you became the owner of the company's shares upon your father's passing away, then these shares will be seen as a "windfall" which you may be obliged to realise to pay into the IVA. In this circumstance, if the company has value you can't simply give the shares away, but may be obliged to get your shares bought out so that this windfall can be paid into the IVA.

Is the business still running ? Then if so, if it makes any profit, either this can be paid to the director as salary, which could be your sister, this is perfectly OK if she is running it, or alternatively it can be paid as a dividend to the shareholders, if you are one of the shareholders, then you will get the same level of pro-rata dividend as any other shareholder and would be obliged to declare your dividend to your IP.

[MelanieGiles]

The value of your interest in the company does not become a windfall when you sell the shares - it is a current asset which has to be calculated now and disclosed in your statement of affairs. Do you know what the value of the company's share capital actually is?

Your explanation of your mother's holiday deposit is perfectly acceptable and will not cause any difficulties in presenting your financial position to your IP. The shareholding does, however, and if not already disclosed you should do so in order to present a true and accurate position to your creditors.

[Nadia]

I'm not sure what the value is as my mum and the accountant deal with everything.

So even if I do not gain any dividends or wages from the business I am just a director and my name is on the business account I need to tell my IP about this? Is it not classed as seperated from me as it is a Limited company?

Will it affect me gaining an IVA? I read that in bankruptcy you cannot be a company director but in an IVA it is possible?

The value of your interest in the company does not become a windfall when you sell the shares - it is a current asset which has to be calculated now and disclosed in your statement of affairs. Do you know what the value of the company's share capital actually is?

Your explanation of your mother's holiday deposit is perfectly acceptable and will not cause any difficulties in presenting your financial position to your IP. The shareholding does, however, and if not already disclosed you should do so in order to present a true and accurate position to your creditors.

[MelanieGiles]

You will definately be allowed to remain as a director of the company in an IVA. A director is an office holder who may or may not have a financial interest in the business. It is your position as a sharedholder of the company which needs to be disclosed to your IP, as if the shares have any value then they are an asset which would need to be disclosed in your statement of affairs. If you can get a copy of the last year's accounts for the limited company, this should show whether your shareholding has any value.

[Nadia]

Many thanks I will get the accounts from my mum and check the share value. Will be in touch [:)]

You will definately be allowed to remain as a director of the company in an IVA. A director is an office holder who may or may not have a financial interest in the business. It is your position as a sharedholder of the company which needs to be disclosed to your IP, as if the shares have any value then they are an asset which would need to be disclosed in your statement of affairs. If you can get a copy of the last year's accounts for the limited company, this should show whether your shareholding has any value.

[Soulgrowth]

Good luck Nadia ... I hope you get things sorted.

Debbie