How will an IVA affect my business?

One of the greatest benefits of an IVA is that you can still keep your business trading and this might not be the case with other debt solutions. For example in bankruptcy you cannot be the director of a limited company and you may be required to sell the tools needed for your trade. With an IVA however this is not the case. To help explain how you can keep your business up and running we have gathered some real life examples from our clients.

An IVA can help you if you’re a self-employed sole trader

We helped a self-employed taxi driver who owed over £35,000 on unsecured loans, credit cards and store cards. He owned his own home where he lived with his wife and two young children. He was worried that in bankruptcy, his taxi and home would both be sold.

We firstly assisted him with compiling a 12-month cash flow for his business. We met him in person to discuss his income and examine his bank statements and accounts.   After the client’s business expenditure and personal living costs were taken into account, he could afford to make a monthly payment of £180 to his debts.

We then set up an IVA for the client, which allowed him to continue trading, retain his taxi and avoid his home being sold. Creditors agreed to write off £24,000 of his unsecured debt and reduced his monthly debt payments by more than £600.

An IVA can help you if you’re self-employed and need to prioritise making payments to trade suppliers

We helped a self-employed newsagent who owed over £60,000 on unsecured loans, credit cards and store cards.

He was worried that in the event of bankruptcy, he would not be able to trade as his shop lease contained a clause which meant he would lose his shop in the event of bankruptcy. He also owed money to two of his key suppliers and was worried that if they stopped supplying, it would affect his ability to trade.

We firstly assisted the client with compiling a 12-month cash flow for his business. We achieved this by meeting in person to discuss his income and examine his bank statements and accounts. After the client’s business expenditure and personal living costs were taken into account, he could afford to make a monthly payment of £250 to his debts.

The suppliers agreed for their arrears to be included in the IVA, and they also agreed to continue to supply in future, providing he paid cash on delivery. We then arranged an IVA for the client, which allowed him to retain his lease and continue trading. All tax arrears were also included in the IVA.

Creditors agreed to write off £45,000 of his unsecured debt and reduced his monthly debt payments by more than £1,200.

An IVA may help you if you’re in a partnership

We helped a Partnership who ran a takeaway business. The Partnership owed £60,000 in unsecured bank loans, and the two individual partners also owed money on credit cards and to tax authorities.   Partners are personally liable for the partnership debts so they were worried that their own personal assets would be at risk, and that their Partnership would be dissolved in the event of bankruptcy.

We firstly, met the partners in person to discuss their debt solution options. We produced a 12-month cash-flow for the Partnership after examining their accounts and bank statements.   We set up a Partnership Voluntary Arrangement (PVA) for the Partnership which ensured that the Partnership creditors could not take any action against the Partnership. The partnership contributed £300 a month to the PVA for five years.

We also set up an IVA for each partner, so that the credit cards and tax authorities did not take any action against the individual partners. After their living costs were taken into account, one partner made a reduced payment of £200 a month and the other a reduced payment of £100 a month to their arrangement. Creditors agreed to write off £42,000 of Partnership debt and £20,000 of unsecured debt.   Their monthly payments were reduced by more than £1,500.

A further example of how an IVA may help if you’re in a partnership:

We helped a husband and wife Partnership who ran a fish and chip shop. The Partnership owed £30,000 in bank loans that they were unable to pay.  

Even though the partnership was struggling to pay the debts, the individual partners had little additional personal unsecured debt. Partners are personally liable for the partnership debts so they were worried that their own personal assets would be at risk, and that their Partnership would be dissolved in the event of bankruptcy.

We met the partners in person to discuss their debt solution options with them. We produced a 12-month cash-flow for the Partnership after examining their accounts and bank statements.  

We also negotiated with the Partnership creditors, who agreed not to take any action against the individual partners, as they had limited assets. This meant we did not need to also set up IVAs for the individual partners. We set up a Partnership Voluntary Arrangement (PVA) to deal with the Partnership debts, which allowed the Partnership to continue trading. The Partnership contributed £200 a month to their PVA for five years.

Creditors agreed to write off £8,000 of the Partnership debt and reduced their monthly debt payments by more than £400.

An IVA may help you if you’re a franchisee

We helped a self-employed driving instructor who owed over £35,000 on unsecured loans and credit cards.   He was the franchisee of a well-known national driving school who paid a monthly fee to the School in return for the use of a car.

We firstly, examined the franchise agreement and considered whether the franchise would be terminated in some of the debt solutions available to the client. After considering the agreement, and speaking to the franchisor, the franchise was at risk in bankruptcy but not in IVA, providing the client made all his monthly franchise payments.

We met the client in person to compile a cash flow for his business. His income consisted of fees from pupils and his main expenditure was the franchise fee and petrol costs. After his provision for tax and living expenses, he could afford a monthly payment of £210 to his IVA. This allowed him to continue trading and protect his home. Creditors agreed to write off £23,000 of his debt and reduced his monthly debt payments by more than £500.

An IVA may help you if you’re the director of a limited company

We helped a director of a limited company who owed over £80,000 on unsecured loans, credit cards and store cards. He had also personally guaranteed some of the limited company debts. He owned his own property where he lived with his wife and two young children. He was anxious to avoid bankruptcy as he would not be able to act as a company director and his property would be at risk.

We firstly assisted the client with compiling a 12-month cash flow for his limited company. We met the client in person to examine his accounts and discuss a valuation for his limited company. The cash flow allowed for the limited company to continue trading, and made provision for payment for all the limited company debts. After the client’s personal living costs were taken into account, he could afford to make a monthly payment of £400 to his unsecured debts.

We then set up an IVA for the client, which allowed him to continue trading, retain his status as director of a limited company and avoid his home being sold. Creditors agreed to write off £56,000 of his unsecured debt and reduced his monthly debt payments by more than £3,000.

An IVA may help you if you’re in a director of multiple limited companies

We helped a director of four limited companies who owed over £240,000 on unsecured loans, credit cards and to the tax authorities. He had also personally guaranteed some of the limited company debts. He owned a buy-to-let property which was rented out to tenants. He was anxious to avoid bankruptcy as he would not be able to act as a company director and his property would be at risk.

We firstly met the director in person to examine his accounts and help him compile a 12-month cash flow for each limited company, a 12-month cash flow for his buy-to-let property and discuss a valuation for his limited companies. The cash flow allowed for the limited company to continue trading, and made provision for payment for all the limited company debts.   After the client’s personal living costs were taken into account, he could afford to make a monthly payment of £1,200 to his unsecured debts.

We then set up an IVA for the client, which allowed him to continue trading, retain his status as director of a limited company and avoid his home being sold. Creditors agreed to write off around £170,000 of his unsecured debt and reduced his monthly debt payments by more than £3,000.

 

*In the case of a one-off lump sum settlement