www.iva.co.uk

Hey everyone, Happy Easter,

I am still waiting for the valuation on my restaurant so, through Melanie, I can offer a full and final iva for debts. I was just wondering how it all works regarding paying suppliers for the restaurant in the meantime. I have to keep it operating and I have kept all my suppliers under trading terms (ie one month), so should I carry on paying them as normal which is usually by cheque. Would this be seen as favouring creditors or are they classed as priority debts? I have a meeting with my business banking manager at TSB who I owe credit card, business loan, personal loan, overdraft to but this isn't until 1st April as she is on holiday next week. I haven't told her yet that I am insolvent and I am selling etc, but my loan will bounce this week.

Help! Any advice greatly appreciated.

v.w

Hi
That is a very good question and one that I think will need an IPs reply.
My feeling is that you should carry on paying your creditors under normal business terms but please wait for a more expert answer
Regards

Thanks Andy, I kind of thought that aswell but I will wait to see if any experts pick this up. Have a nice day. v.w

Hi
You should only buy what you can afford to pay for. Ideally youshould be paying for things as you require them and not taking any further credit. Operating while insolvent is very serious thing. If you are a limited company and it is proved that you traded while insolvent you would become personaly responsable for the debt incured

Thanks for your reply Dave, I'm not limited. I just need to keep everything going until I sell my restaurant. Fingers crossed the valuation comes in at more than the debt... I can only hope. v.w

Good luck

Draw a line in the sand - say from today onwards - and make sure that you can pay for the items you are ordering under normal payment terms.

There is no need to be dramatic about trading whilst insolvent - so long as you can clearly continue to pay for itmes as they are required. You are trading on with a view to preserving the business as a going concern, and I am happy for you to do that in the short-term until it is formally valued.

Thanks Melanie, I was hoping you'd reply. I feel better now, I thought I was committing some sort of crime! I think I'll tell all my suppliers what is going on, I have an excellent relationship with all of them, they have known me for years while I have had my own business and when I worked elsewhere, so I'll be honest with them and make sure everything is operated correctly. I NEED to keep the restaurant open. Valuers coming on Thursday, I'll keep you posted. Kind regards, have a nice Easter, v.w

Hey Melanie,

I probably should phone your office for this advise but I thought I would post as it might be of interest to anyone else out there in a similar situation to me.

I did draw a line in the sand and since that date I have been paying "cash on delivery" for everything. However, I still need to pay for the months before invoices as these were on monthly account basis.

My question is, do I still carry on paying off those invoices as I would normally? The suppliers are veg man, butcher, wine merchant, seafood supplier, dried goods and dessert supplier. My worry is that if I don't they will cut me off and if I do that will be seen as favouring these creditors over the financial creditors and my iva proposal will fail.

Thanks. Viki X

Yes - you need to try and pay them off as duress creditors, but I do have concerns that you are not generating sufficient profit to do this. You must not fund this by ongoing credit, as the situation will just continue to get worse.

No, I definately will not be taking anymore credit. I have cancelled quite a few d/ds and s/os for maintenance contracts that I have to have but will no longer need, eg. rentokil does the fan cleaning every six months which I have to have done and provide certificate to insurance company, I spread this cost over monthly payments but it has just been cleaned and they have agreed to cancel it with no charge as hopefully I will be out by then. There are a few other things like that I have done so that I am merely paying the bear minimum, plus my dad paid the monthly rent for the restaurant of £975 and said that I could miss this months mortgage payment to him of £999.87 so that was a big help.

I am only paying things if the takings allow. I have also sold some things on ebay and put that in the business as "capital introduced". I'm just trying to keep it open. I hope I'm doing everything right.

Thanks for your reply Melanie