I am a director of a two man small company and my business partner wants out! I am currently in an IVA and would like to carry on with the business. The business has no debts but because I am in an IVA would I be able to carry on? The problems I can see are banking etc. Has anyone else been in the situation? If the business closes and I am unable to carry on trading my salary obviously would go. The business is not making a huge profit but if it were to keep trading would guarantee me a salary for the next five years. Could I go self employed or could I start a new company?
Hi Alvie. The company is a separate entity and your IVA should not affect the company's ability to trade. Any banking facilities would remain and as there are no debts there is no issue with personal guarantees.
There is nothing to stop you closing the company down and operating as a sole trader but it should not be necessary. Speak to the company accountant about what you are proposing to do and keep your IP informed at all times.
I am assuming that the business is a limited company and not a partnership? If so, as Michael says, the company continues with little disruption if your co-sharedholder wants to leave. What does he intend to do with his shares, and are they worth anything?
Thank you both Michael and Melonie. We are a limited company and bank with Lloydstsb who is one of my creditors. Are you saying that the bank would allow me to keep these accounts open, which would make me solely responsible? To answer your question Melonie my partner has 52% shares and obviously I have 48%. We only started 4 years ago, so, the company has no value (like other small business's we were just turning a corner when the recession took hold) . It would probably work out that my partner would want to shut the business down and walk away whilst It would provide me with an income and probably allow me to pay more into my IVA. Its a scary time for me and I have personally worked really hard probably 12-14 hours a day and don't want to chuck it all in!!
There is no reason for Lloyds to remove your banking facilities so the company should not be affected. Your partner could sell you his shares for £1 if he wants to walk away and resign as a director to ensure he has no statutory obligations remaining to the company.
This may lead to higher earnings for you but bear in mind you may need to employ someone else. Any additional profits could be drawn as dividends or increased wages which would improve your dividend to creditors.
Thank you Michael. If in the future I have any other questions could I come back to? its not going to happen overnight but I want to be ready for when it does. Again thank you.
