An income and expenditure will be prepared on the basis of existing and past accounts and to the prospect of maintaining any formulised agreement.

Business IVA again will be treated in the strictest of confidence, however one needs a substantial amount of background and future proposals before one can give any guidance as to what options may be available as we do not give false hope.

Financial Rescue Package (Business IVA)

Debt Direct Ltd has recently extended its services to provide a financial rescue package (advice) whereby Debt Direct Ltd can negotiate directly on an informal basis with HMRC and creditors alike on the behalf of companies.

This extended service has been sought by our existing customer base and has proved favourable for the continuation of the businesses in question. If such can be achieved then one would class it as an informal voluntary arrangement and will not affect credit records.

Most Directors and company individuals appreciate the assistance of Debt Direct Ltd in seeking balance between the creditor and debtor to allow harmony in the settling of outstanding debts and borrowings.

Re-structuring of company debt is paramount to its continuation and sometimes this could only be achieved with the assistance of other factors.

Questions That We Frequently Come Across

Q) What would happen to my company if it becomes insolvent?

A) Should your company become insolvent with no alternatives or the basis of a proposal for a CVA it maybe forced into bankruptcy.

Q) If my company goes into liquidation would the Inland Revenue and Customs Excise take precedence?

A) They will be inclusive within the creditor’s formation, however it is unlikely that they would take precedence as a secure creditor.

Q) Once my company goes into liquidation, will I be informed at what is going on?

A) Should your company go into liquidation the Official Receiver would normally appoint an Insolvency Practitioner to over see the affairs of the company and it is normal practice that you would be updated as and when he thinks it is appropriate.

Q) I am a company share holder, what will happen to my shares in the event of bankruptcy?

A) LIn the event of a bankruptcy all assets are forfeited for the benefit of the creditors.

Q) What is an administration order?

A) An administration order is a court order that covers outstanding debts the Court would over see and distribute any monies pro rata amongst the creditors, the Court Administrating the order would receive a handling fee.

Q) If our company is accepted for a Company Voluntary Arrangement (CVA) who will oversee the running?

A) An Insolvency Practitioner would be appointed and he would be involved in the general running and day to day activities.

Q) Our company has recently entered a voluntary arrangement but no-one to date has explained what the effect will be on the shareholders, is it possible to do so?

A) The shareholder of a company becomes an asset within the voluntary arrangement and it will for the Insolvency Practitioner to establish any value for which he will report to the creditors.

Q) If a company for which I have an investment goes into liquidation, do my shares have any value?

A) Any company going into liquidation would result in the shareholding being classed as an asset and will come within any final dividend.

Q) What will be the effect on the directors of a company that has gone into bankruptcy?

A) The company directors may have given gaurentees and thus these gaurentees may be called in by the Offical Receiver's office, the directors could be disqualified if shown that they have acted in any way in an unlawful manner.

Q) Are all debts discharged once a bankruptcy order is made?

A) Debts are only discharged after the final meeting of creditors.

Q) Can we apply for bankruptcy on our company?

A) The answer being yes, however there will be costs in making such an application.

Q) Are there any alternatives to company bankruptcy?

A) There are many alternatives but solutions can be found by knowing all the facts, many company directors have recently opted for a CVA as a solution, however this could be premature unless all the facts are known.

Q) What is the best solution: Bankruptcy or a CVA?

A) A CVA will allow the continuance of the company under supervision against bankruptcy which will see the company sold off. The assets would either be sold within the company sell off or independently resulting in a payment to the creditors on a pro rata basis.

Q) I am a sole-trader, does this mean that I could be made personally bankruptcy?

A) The answer is a definitive yes, and therefore one should be careful and take immediate advice.).

Q) Are debts discharged in any preferential order within a CVA / Bankruptcy?

A) Debts are discharged if on a secured basis such would take priority all others would be on a pro rata basis of the debt.

Q) If the company is declared insolvent, will the business and / or assets be lost?

A) It may be possible to sell the business and assets jointly or individually to the benefit of the creditors.

Q) I have recently been made bankrupt and have been informed I am to receive a tax rebate, will I have to declare it?

A) Yes, all benefits should be reported to the Official Receiver or the Insolvency Practitioner handling your affairs.

Q) I am two years into an IVA and find that I cannot fulfill the agreement, what do I do next?

A) Your first protocol should be to seek a meeting with the Insolvency Practitioner overseeing your IVA to see if it is possible to apply for a variation, if matters can not be re solved it is possible that your IVA could result in a bankruptcy.

Q) Is it possible to switch from an IVA to a bankruptcy?

A)Yes it is possible to switch if one finds that they can not meet the terms within the IVA. If you make yourself bankrupt there is a cost of £475 however should creditors make you bankrupt, any cost will come from your estate.

Q) How long will my bankruptcy remain on my credit file?

A) After one year you will get a discharge certificate however the register will show when you entered bankruptcy and when you were discharged.

Q) Will an IVA or bankruptcy have any effect on my private pension?

A) Private pensions form part of your assets and should be declared and it will be for the Official Receiver or the Insolvency Practitioner to resolve matters.

Q) How do I go about making myself bankrupt?

A) You can make an application to your local court, the current cost at 2007 was £475 how ever this could have changed.

Q) What advice is the available to small businesses or individuals who are encountering financial problems?

A) Advise can be had from many quarters however full disclosure would have to be made available, the most probable help could be found in your local business directory.

Q) My company has a CVA however it is experiencing financial problems and it looks as though we can not continue, what will happen?

A) Firstly a meeting should be held with your Insolvency Practitioner to see if he can be of assistance for the continuation however it could be possible that should no resolution be found the company could be wound up.

Q) If I go bankrupt how long will I have to make contributions?

A) Bankruptcy contributions are normally over 3 years and they are based upon disposable income.

Q) Can an enforcement notice go ahead if the creditors have approved my IVA proposal?

A) Creditors are bound by the agreement and therefore action may be taken unless your IVA has been declared failed.

Q) Will HM revenue and Customs & Excise support an IVA or CVA proposal?

A) HMRC insolvency unit approach all applications with an open mind and will address each proposal independently.

Q) How long will an IVA take to put in place?

A) The length on time will be dependant upon the applicant returning the document and any further information required to allow an IVA proposal to be drafted, once drafted it will be sent to the applicant for their approval, subject to any amendments the proposal will be sent to all creditors which would normally take 21-28days, after which it is ratified through the court and a meeting convened. The long and the short of your answer is that with your assistance it could probably take 8-10weeks.

Q) How is a CVA application made?

A) A CVA application is made in a similar nature to an IVA once formal discussions have taken place and the relevant documentation completed a proposal would be made and disbursed for consideration by the creditors.

Q) We have a company which is technically insolvent in that we have no cash in the bank but have an outstanding debt book, how can we prevent bankruptcy?

A) It would appear that you should be discussing this with your accountant who may be able to factor your current invoices should you be unable to get further assistance from your bankers. It could be possible for to apply for a CVA if assets are available but un-available at this time. An Insolvency Practitioner could assist you and your accountant further on this matter.

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