I have a business that is struggling. It has been suggested that I take out an IVA to ring fence the debts and protect me whilst I try to sell the business.
I'd appreciate any advice pros and cons etc.
I've been so tied up in knots over this and keeping the business afloat that I'm struggling to understand how it will help me and the IP I have met with doesn't seem to be able to make it clear to me. I owe money to the bank, landlord, credit card, HMRC, suppliers and family.
I have no CCJ's and credit card payments are currently up to date. HMRC and landlord payments are late but landlord is currently sympathetic. Any help would be gratefully received
Whilst we can give you general advice in public on the forum, it would be far better for you to seek assistance directly from an insolvency practitioner experienced in working with the self-employed.
The first stage will be to assess the viability of your business to see if it can be profitable without the burden of the debts, and also whether it is going to be worth anything to a purchaser. You also need to think about what you will do to find an alternative income.
With regard to HMRC, they will need to have all of your outstanding tax and VAT returns submitted before they will consider supporting an IVA, and do check the terms of your lease as it is entirely possible that this will terminate if you enter into any form of insolvency proceedings, which could then affect your ability to transfer the premises to any new purchaser.
Dealing with self-employed cases is always a little more challenging for IPs, so do be sure you have found someone who has a good track record in dealing with this type of case.
Thank you so much for your response. I have spoken to someone locally but although I have been given some advice I don't feel entirely comfortable with the relationship.
A spreadsheet has been created to look at the business viability but does need fine tuning.
No mention had been made regarding the lease and possible termination so I will try to check that one out.
The business has been on the market for a few months but have had no interest so far. It does have reasonable profits but my debt has meant I've struggled to keep going.
Hi Middle. Mrs H and I have 2 IVAs as I have the majority share in the family business and she has a 10% interest.
Our main income is from her salary as a teacher and the business had been struggling for a number of years causing the accumulation of our debt.
What business entity do you have? Ours is a simple partnership. We included 2 large business overdrafts, credit cards, and VAT liabilities in our proposal as well as personal stuff.
Once we got the IVA approved we got a case officer at HMRC VAS Worthing to sort our new self assessment out. But be warned the cogs at HMRC turn very slowly!!
In terms of VAT I had to resubmit the VAT return for the quarter containing the date of the IVA acceptance, splitting the liability brfore and after that date, in order to identify pre and post IVA figures.
Last edited by Hyperdrive on Tue May 21, 2013 8:00 am, edited 1 time in total.
I am a sole trader. situation is much the same as you - debt has accumulated as the business has struggled during the recession. I want to sell the business but need to protect things why I try to do this and thought the IVA might be an option - if the business sells I can probably repay all debt.
We were not limited either. As a simple partnership we were able to put business debts into the IVA. Is your business pofitable now ?
I know Mel has experience of sole traders so I would def give her a call.
Last edited by Hyperdrive on Tue May 21, 2013 10:06 pm, edited 1 time in total.
Trouble is, Middleofnowhere, nothing is selling! We tried to sell our struggling business to help pay off personal debts. Many people were interested but dropped out for various reasons and noone could get funding from banks. It took 18 months in the end, during which time trade decreased a lot as word had got about. By the time we sold, the price was a third of what we had been asking originally (and that was realistically priced for a quick sale!), but we had no option. All the money from the sale went to the landlord to cover the rent for the previous 6 months,we had to borrow from family to pay outstanding business rates and the selling agent, and we ended up going into an IVA to cover personal debts and a business bank loan which we had given a personal guarantee for.
The stories are very indicative of issues SMEs are facing on a day to day basis, and without financial support from banks a lot of people are being forced down similar routes which can hardly be good for the overall economy as a whole.
