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Hello all

This question is on behalf of my brother in law who has a limited business and has debts under both the business and those that are personally guaranteed by him.

He is currently speaking to a business who says that he can go bankrupt for the mere sum of £5,000!! which he obviously can't afford to do.

I thought the fee was about £500, does this apply to business debts as well or can he do an IVA for them and liquidate the business.

many thanks

Hi

Does your brother in law want to wind up his limited company as well as petition for his own bankruptcy?

There are a few ways that a company can be wound up and it really depends on his situation which one will be more appropriate for him. I would suggest that your brother in law seeks advice from an insolvency practitioner.

From the sounds of it I would imagine that the cost of £5,000 which your brother in law was quoted was the fee to place the company into voluntary liquidation. There are insolvency practitioners who will do this for less or alternatively, if the company has no assets and no means to pay for a voluntary winding up it may be possible to apply to Companies House to have the company struck off the register. The problem with using this method is that a creditor can apply to have the company restored to the register within 20 years of the date of the striking off so there is no closure.

The fees payable to make yourself bankrupt are £495. That is £150 for the petition fee and £345 for the deposit to cover the costs of the bankruptcy. It is possible to employ an insolvency practitioner or other party to assist with the completion of the petition and statement of affairs but the charge for this is normally between £350 and £500 depending on who you choose to help you.

Many thanks for the advice. I have advised him to speak to someone quickly, hopefully he will take my advise.

Thanks again.[:)]

I think what your brother should do is to fix up a meeting with a local insolvency practitioner to properly discuss his options in the light of the specific facts. A meeting should cost nothing.

As Liz rightly pointed out, there are a number of options available - the one suggested to your brother does appear to be a creditors voluntary liquidation (at least I hope it is) but I get the feeling that the company side of things is likely to be secondary given the personal guarantee situation.

Whether an IVA or a bankruptcy is the right solution for your brother wil very much depend upon what he wants to do and, importantly, his earning potential. Again this is something he needs to take advice on at the meeting.

Ian

I would not be so sure that he has not been quoted the sum of £5,000 for bankruptcy assistance. We regularly get stories of this sort of money being quoted by some firms who operate in this industry.