Sole Trader Insolvency

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.

Sole Trader Insolvency

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 to 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 of sole trader insolvency, can help to preserve a business and protect personal assets.

Sole Traders – Getting Help Quickly

1. You need to approach Lines Henry for help. We will talk to you about your financial circumstances, how you got into difficulties and how we will be able to help you.
2. You will need to provide us with details of about all the assets you own in the business and also the assets you own personally. This is because a sole trader is personally liable for debts of the business.
3. If you own a property then we will need to know how much it is worth and what the mortgage is.
4. You will need to tell us about who you owe money to. Again, this will need to include both the debts of the business and your personal debts.
5. We will need to know how much you need to live on so that  we understand what you need to earn to provide for your reasonable domestic needs.
6. We will look at the profitability of the business to establish whether or not it produces enough money to pay the drawings that you need to take home and whether there is anything left over to pay creditors.
7. Once we have all the information we will be able to give you the options that you have and what is the best way of achieving your objectives.

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