Catalogue of mistakes

hangingbyathread

Hi

Our business and my husband and I as individuals were declared bankrupt on 28/5/14, in Scotland. There are a few issues that maybe some of you may be able to help with.

Our house was mortgage free so we used this as security to purchase a public house in 2008. It was bought with the intention of giving me and my two daughters employment, my husband was continuing in his own job and wanted nothing to do with running the pub. After purchasing the pub I set up VAT & PAYE in both of our names as I thought I should since the pub was bought in both our names. Seemingly this is enough to say that we were a Partnership. Also O.R. say's that pub is registered on Land Registry as a Partnership but I think it is just under both our names.

HMRC took action against us for a debt of about £25k. We were just about in the position of them taking action last year but managed to pay them two large sums and paying them £250 weekly. We were able to pay the two large sums as I found out RBS had made a mistake with our loan and instead of us being interest only for 2 years they had started taking capital & interest payments a year early so they refunded just over £12k. I paid HMRC £8k towards VAT & PAYE and £4k for Self Assesment. My husband paid a further £16k towards VAT & PAYE from his own funds. After these payments were in April 2013, I set up a standing order paying £250 per week and all was going well until due to having a glorious summer trade dropped drastically then we were hit with an electricity bill of £8k due to our supplier undercharging us for over a year, despite taking meter readings at least 3 times. They put me under so much pressure to pay this money that I had to stop the payments to HMRC in September as it was a choice of having the power cut off and having to close the doors anyway. Business did not improve much and things were really tight but my husband continued to pay the power company from his own money. I made a few changes business wise and things were heading in the right direction and we were just about to start paying HMRC again when they took action against us for a sum of £25k

Before it was brought to court an offer was made to HMRC through our lawyer stating if they stopped proceedings this would allow us to restructure further and allow us to pay them £330 pw towards arrears plus £195 to pay current liabilities before they became due. This offer was rejected via our lawyer.

Second offer a lump sum payment of £10k (using an ISA my husband had put in my name) plus the same weekly payment as above. This too was rejected via our lawyer.

Third offer, faxed directly from myself before the final court date, lump sum of £16k (using same ISA) plus legal expenses plus £350 pw towards arrears and £200 for current liabilities. This offer would have cleared the debt and our ongoing liabilities would have been up to date within 25 weeks. This was rejected by a telephone call to myself but they did not indicate what a suitable offer would be only that this was not acceptable and they would proceed with the action.

However, after we were declared bankrupt my husband contacted the person at HMRC to ask why they had continued with the action as they will probably not get a fraction of what they are due and they put 8 people out of a job. He was told then that our Lawyer had been advised that the maximum period they would have allowed was 3 months. At no time did our Lawyer tell us this and this is not stated on any communications from them.

After looking at information available from The Accountants In Bankruptcy we thought that they would actually talk to us about the business and we would have the opportunity to discuss further measures that could be taken to allow the business to continue to trade and be sold as a going concern. This was not the case the Administrator arrived on 11/6/14 and closed us down and changed the locks. So not only have they devalued our asset by a substantial amount by closing the doors they have taken anything of major value such as ice machine and glasswasher which no doubt will be sold at a fraction of the value at auction which again devalues our asset. Are they doing this to make sure they can take absolutely everything from us?

We made the bank aware of the above and they are none too impressed either. They wanted the business to be kept open to be sold as a going concern as that way there is less of a likely hood that they would have to take action against our house (they have security over both properties). The bank have tried to contact the administrator but none of the calls have been responded to.

Obviously there is now arrears on the mortgage for the pub but I am not sure what we can do, if anything. My daughter is still staying in the flat above the pub (allowed by administrator as no access to pub) and I presume bank will have to go for repossession of the property. We have discussed with them about continuing paying the mortgage (would administrator allow and can we claim this as an expense off my husbands income?) or can someone else pay this on our behalf? Bank says that administrator can force sale of pub but bank says they have the right to refuse to accept an unsuitable offer. What do we do???? What can we do??? I don't want to lose our house...it was originally my parents house who brought up me and my 3 brothers here then we bought it from my mum in 1988 and have brought up our 2 children here...all the memories this house holds.

Further salt in the wound is that my husband eventually found the paperwork for a policy he was paying that had another £14.5k in it. This would have solved all our problems had it been known at the time!! On paper we were not bankrupt but that does not help now!!

I would also like to know if there were other routes that we could have taken such as setting up a CVA (I think this is the correct term) once proceedings had been taken because our lawyer did not give us any advice.

Sorry for this message being so long but there is probably stuff I have forgotten to say. Any help from anyone would be greatly appreciated.

hangingbyathread

Any advice please?

longtermplanner

I am sorry but I think you need to find a good Scottish lawyer specialising in insolvency.

hangingbyathread

Thank you longtermplanner have been thinking along those lines but was not sure if there was anything that could be done

TheGardener

I concur with longtermplanner - your situation is beyond the expertise of most of us and Scotland's laws are quite different when it comes to BR and property. I hope it works out for you.