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Avoid Bankruptcy

If you have a business, are self-employed or in a partnership, your creditors can commence bankruptcy proceedings against you if you owe them more than £750. Similarly if you trade as a limited company, its creditors can “ bankrupt” the company by presenting a winding up petition to the court.

There are a number of insolvency procedures, only open to licensed insolvency practitioners, designed to assist both individuals and companies in avoiding bankruptcy/winding up.

One option is known as a Voluntary Arrangement. Either an Individual Voluntary Arrangement or a Company Voluntary Arrangement. These procedures can provide court protection to the debtor individual/company, to allow a Proposal to be prepared, which is put to all of the debtor’s creditors at a formal meeting. This procedure is very flexible and can range from offering creditors so many pence in the pound over a five year period in full and final settlement, to merely obtaining a breathing space of a few months to allow for the sale of an asset and payment in full. Generally the Licensed Insolvency Practitioner, who will act as Supervisor, allows the debtor to retain day to day control of the business, which he will monitor.

In addition to Voluntary arrangements companies can also take advantage of a procedure known as Administration. This protects the company and its assets whilst the Administrator (who must be a Licensed Insolvency Practitioner) puts forward his Proposal to creditors. Creditor’s legal actions, landlords threatening distraint for unpaid rent, leasing companies looking to re-possess goods, can all be held back by Administration, whilst the Administrator puts together his Proposal.

The Administrator is much more involved in the day to day running of the business than in a Voluntary arrangement. An Administration is normally suggested where there is a real prospect of salvaging all or part of the business, or where it protects the assets for the benefit of all of the creditors.

For further information call Lines Henry on 08081 446611 for a free consultation.

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Just-Debts is the one stop web site for people with debt problems. Whether you have debt problems, are currently in debt management and looking for an alternative, considering debt consolidation, or an Individual Voluntary Arrangement. Take advantage of our free consultation service.