What is a Sole Trader?
A sole trader is a person who trades under their own name, or has a trading name. They do not trade through the medium of a limited liability Company and are personally liable for all of the business debts. This is to be contrasted with the Director of a limited Company who may be able to place the Company into Liquidation and, unless they have personally guaranteed debts, will not be personally liable for the Company’s business debts.
One of the major difficulties we have experienced with sole traders is that because they know that they are personally liable for the business debts, they tend avoid taking specialist advice in the hope that things will improve. Whilst this may happen occasionally, hoping for an improvement is not often a practical solution. Seeking advice at an early stage can help to preserve a business and protect personal assets.
How Can Lines Henry Help?
We have helped many sole traders to restructure their business and overcome their financial problems. This can be by way of an informal arrangement with creditors, or by using a formal insolvency procedure such as an Individual Voluntary Arrangement (IVA).
An IVA is an arrangement between the trader and all of his creditors both business and personal. It is extremely flexible and can be anything from a short repayment holiday to a full and final settlement of all of the unsecured debts. The method of repayment can be through monthly contributions out of profit, the sale of surplus assets or a one off payment. In some instances third parties (usually relatives) have introduced a lump sum to pay creditors a one off dividend in full and final settlement of creditors’ claims. Whatever route is chosen, it is important that the business itself is fundamentally profitable and able to pay future liabilities, even if it cannot pay all of its past debts. An IVA has to be proposed through a Licensed Insolvency Practitioner. Lines Henry is a specialist firm of Insolvency Practitioners who offer free initial advice.
For further information and a free consultation contact Lines Henry on 0800 012 6649