Some help regarding my small business..

JasonT_2

.. I sold my car & everything else i owned of any resale value in order to set up a small retail business after failing to get a place at my first choice university. The business made a small profit in its first year & was doing fairly well.

In the second year I took on another venture in a totally different field & it failed miserably.
The venture was done through the same business name (in terms of invoices etc) & In hindsight I should have set up another company to put it through so not to jeapordise the original retail side of the business.

The business still owes a few thousand pounds to a very large contractor used for the failed venture. I explained what had happened & that I'd attempt to sell the remaining retail items the business had to pay off whatever I could of the debt before folding the company. They didn't respond to this & have made no contact since, it's been about 6 months now. Is it wishful thinking to hope they've forgotten about the debt or are they simply waiting to see if I do fold the business?

I have since been contacted by a friend of a friend who has expressed a great interest into buying 50% of the company, they are only interested in the retail side of the business & they don't know about the failed venture.

I'm not really sure what my options are now or how I should move forward. The offer I've received for the 50% will not cover the full debt owed, should I contact the contractor & try to make a deal or wait for them to contact me? I'm thinking that if I do the latter & they do contact me/I don't tie up loose ends properly, I may jeapordise my relationship with my new business partner as I haven't been completely open with him.

I've ran my situation by a few more experienced people who have all offered very different advice, examples of which are as follows..

A. Ask the companies involved with the failed venture to amend the invoices to a different company name so to keep the different ventures separate. - I would have thought it was too late to do this?

B. Fold the company & set up a new one in my & the new partner's names, transferring stock over to the new one. - Problem with this, will we still be able to trade through the same webstore, which has the same name as the original company name?

I feel very much out of my depth & everything that's happened has really taken its toll on my health over this past year so any advice/help anyone is able to offer would be greatly appreciated.

Horace

Asking companies to amend invoices re the failed venture is fraud.

Don't go into business with anyone unless you tell them everything - your potential business partner should do their own due diligence too with regard to what they are buying into but you need to be up front with them regarding this debt.

You need to find a way of paying off the contractor that you owe thousands to (I am at a loss to understand what you bought that cost the thousands that you now owe). You still owe them and they will be adding daily interest until the debt is paid. Remember if they sold you goods that the goods will most likely still belong to them unless paid for in full.

Seek advice from an accountant and a solicitor. Sounds to me as though you need to seek professional advice.

Premier_2

JasonT wrote: »

... Is it wishful thinking to hope they've forgotten about the debt ...

Probably. Debts rarely just disappear

JasonT wrote: »

I have since been contacted by a friend of a friend who has expressed a great interest into buying 50% of the company, they are only interested in the retail side of the business & they don't know about the failed venture.

If you call that a friend, you don't need any enemies do you? Tell them now!

JasonT wrote: »

I've ran my situation by a few more experienced people who have all offered very different advice, examples of which are as follows..

A. Ask the companies involved with the failed venture to amend the invoices to a different company name so to keep the different ventures separate. - I would have thought it was too late to do this?

Experienced people? You appear to be mixing with the wrong crowd if that is the advice they have suggested. Get independent legal advice.

JasonT wrote: »

B. Fold the company & set up a new one in my & the new partner's names, transferring stock over to the new one. - Problem with this, will we still be able to trade through the same webstore, which has the same name as the original company name?

I feel very much out of my depth & everything that's happened has really taken its toll on my health over this past year so any advice/help anyone is able to offer would be greatly appreciated.

You are out of your depth, and you are not getting help from the right people.
Is this a limited company? If not, you've no chance of doing this as the debts are your personal ones. If it is, you will still fail as the creditor will most likely object to you folding the company until you have paid your way ... and that means liquidating the companies assets i.e. selling the stock!

Again get independent legal advice, not from friends, experienced acquaintances, or the internet.

JasonT_2

Hi Horace, thank you so much for your response.

I'd really rather not go into the failed venture with the new potential partner if there is anyway around it as I think it would prevent the deal from happening & has nothing to do with the area of the business they want to invest in.

Re: a solicitor or accountant I don't currently have a penny to my name so that's not really a viable option for me.

Does anyone see any other possible options at all? Take out a loan to pay off the debt & hope with the new partner on board hope I'll make enough to meet the payments? Offer to start a new business providing the same products with the new partner to keep them out of the mess I'm in?

Premier_2

JasonT wrote: »

.. I sold my car & everything else i owned of any resale value in order to set up a small retail business after failing to get a place at my first choice university. The business made a small profit in its first year & was doing fairly well...

Hang on, 3 weeks ago you posted claiming to own a car and a Cartier watch. :huh:


https://forums.moneysavingexpert.com/discussion/3367378

JasonT_2

Hi Premier, thank you for your response too.

Maybe I should have said more experienced than myself!

& yes the company is a limited company.

JasonT_2

Premier wrote: »

Hang on, 3 weeks ago you posted claiming to own a car and a Cartier watch. :huh:

Not that it's really any of your business but I inherited the watch from my dad after my parents passed away. Hence why I now live with family friends. I also look after my little sister & bought her car, insurance & paid for her lessons. The car is in my name as I bought it & I only got myself insured on it when I sold my car as my she hadn't passed her test at that time so wasn't driving it regularly, only for practice. When she saves enough money to buy herself another one I'll be able to sell if if needs be but at present I wouldn't sell the watch nor the car, no matter how hard times got.

All of that's besides the point & I don't really like talking about it to be honest so any more help/advice with my original problem would be appreciated..

Savvy_Sue

JasonT wrote: »

I'd really rather not go into the failed venture with the new potential partner if there is anyway around it as I think it would prevent the deal from happening & has nothing to do with the area of the business they want to invest in.

Actually, it does have something to do with the area of the business you want to invest in. Namely:

JasonT wrote: »

the mess I'm in

I don't claim to know a lot about limited companies, but one thing I do know is that directors can be banned from acting as directors if they've failed to fulfil their obligations on a sufficiently spectacular scale, gone bankrupt or things like that.

In other words, if the directors of a limited company are in a mess, then the limited company is in a mess.

If the directors of a limited company are not honest, then the potential for disaster is very great. And forgive me for putting this bluntly, but if you are not honest with your friend about the state of things, then you are not at all a good friend to them.

I'm sure that if you'd known then what you know now you'd have done things differently, but the fact is that you are where you are. And we can't give you advice you can rely on (ie advice you can sue us for giving if we turn out to be wrong, as someone so beautifully put it in another thread), which is the kind you need right now.

Annisele

Are you certain that you're not trading whilst insolvent? (If you don't know what I mean, post back and say so).

You *need* to be upfront with your potential business partner about the debt if they're planning on buying half of your company. If they're just interested in buying assets that belong to the company, that might be different.

(On the car point - the insurance company do know who the main driver is, don't they?)

JasonT_2

I don't know what that means Annisele, can you please explain.

& yes she I am only down as a named driver on the car insurance.

Savvy_Sue

Jason, I was typing while you were typing. Forgive me if I've been very blunt, I don't mean to be unkind or rude.

We have asked: is this a limited company? It's important to know.