father iva business debt information

hellvelyn

Hi, I hope someone will be able to give some information regarding an iva.


long story.


my father is a self employed pub owner (and other businesses historically) he has been hit hard by the recession but managed to trade out of debt by selling off some businesses putting a charge on the house etc. currently he owns a single pub, its viable ticks over and pays the bills.


He is up to date on current hmrc bills but he has a historical vat bill of 35 k which he has been unable to pay.


My parents have been trying to sell their house in order to pay the debts and keep hmrc happy but they will not wait. Had a buyer and was proceeding etc but they will not wait and will be bankrupting him on the 10th sept.


To make matters worse the house sale hit a major glitch when it was found to have a couple walls on an old extension which had mundic blockwork and so is now potentially unsaleable!!!!!!!!!! but we are still waiting for the concrete analysis. although hmrc etc don't know this yet they still are aware that he is going through a sale but they will not wait.
we may still be able to sort the house sale etc but its going to take longer as this will need to be sorted before its mortgageable and therefore saleable. otherwise its only worth anything as a building site now!




the house is (was!) worth 750k

• outstanding mortgage being paid by my mother 140k
• charge on the house from the business 81k being paid up to date monthly by my father (coping).

these debts are on the house and are being met and no arrears.


he has some credit card debts (not sure how much guessing 5-10k but unsure of this. he is making minimum payments.


the pub is ticking over but has no inherent value and as any pub isn't worth selling, its a leasehold.


He is paying the ground rent and all the bills are as near to up to date. He has a rent arrears of I believe 30k that he is paying off and the landlord is fine with this (to be honest he should be happy that someone is renting it as he wont get anybody else, lots of empty units)




so he is coping but unable to pay off all the hmrc 35k debt, they wont accept payment over time and so are going for bankruptcy.


He has been advised to go for an IVA and is due to see the solicitor on Tuesday to go through things.


My question is, can he have an iva for specific debts as in just the hmrc debt or does all the unsecured debts have to be taken on board. It is really only the hmrc debt that is the problem. or is it better to lump all the debts credit cards, hmrc, rent arrears together and do an iva on the lot,


if he manages to sell the house and then pay all the debts surely the iva is gone at that point as they could all be paid in full


does the iva have an impact on the ability to trade as if he cant trade he is bankrupt or can he continue to work his way out of it.


I'm sure the solicitor will go through things properly but would like to know if anyone else has had a similar issue or be able to give some advice so we can work things out.




seems that he has worked so hard to trade out of it and nearly managed (he should have been a ltd company but that's another matter) but hmrc being the parasites that they are will not cut him any slack.


he is just about coping but is heading towards a meltdown and is probably going to go back on meds to help him through it.


the landlord is happy, the banks surprisingly are fine, but hmrc will end it. If he goes for a business IVA what will the banks end up doing could they shut him down even if other things are going ok and he is meeting ongoing debts?


sorry for the long post


It looks like an iva is the best option as bankruptcy means he has lost everything including the roof over his head.


thanks
c

tigerfeet2006

Post this over on the IVA&DRO board. They should be able to advise. I'm guessing that all debt will have to be included.

http://forums.moneysavingexpert.com/forumdisplay.php?f=159

hellvelyn

thanks, have copied it over
c

toddle2u

Hi Sorry to hear of your Fathers problems. To answer a few of your questions:
1) all unsecured debt has to be included in an IVA
2) He can continue to trade in an IVA as a publican but he cannot hold the Premises Licence.

He could do an IVA whereby the terms are he makes a minimum payment for 12 months in to it whilst trying to sell the property and then when property sold he makes a lump sum payment to pay off all creditors.

With the (potential) amount of equity bankruptcy would be rediciulous which is why I would say the IVA giving time to sell property would be best.

hellvelyn

thanks for the reply.


as an update things have got worse.




there has been a meeting with an ip and he has been advised that on the 10th sept he will be at court for a bankruptcy hearing by hmrc. He has come clean on the further debt.


he currently owes
100k to the landlord - he is also tied in for a further 3 years so could be liable to another 90k


he also owes 20k to the brewery.


the pub is leasehold so worthless
20k credit cards and 6k bank overdraft
then there is the house debt


140k ish on the mortgage and 81k as secured business debt on the house.
the house is worth possibly 700ish but has problems.


I just hope they give my parents time to sell as otherwise my mother would lose all her share.


secured debt - 221k
unsecured debt -146k
the house if sold for a reasonable amount may cover most of the debt but probably not, as long as mum can hang on to some value




The ip has suggested that they may hold off for 6 - 9 months in which time they will try to sell but if not sold in this time then it will go to auction. this seems harsh. My wife and I and our two children currently live with them and we were trying to sort the debts by buying the house but it is impossible now and so we have to find somewhere, I hope that us being there with kids delays the court somewhat from a forced sale.


My dad is in denial and seems to think he can trade through it, and the ip has said she will try to get an iva done to give more time to sell etc but he is just being an ostrich so bankruptcy is likely. I really feel sorry for him and feel helpless as we cant do anything to stop it, I cant afford to buy the whole house for its full value so cant stop this as a concessionary sale is likely to lead to serious problems now. I just feel so sorry for my mum as she could lose everything if they are forced to sell for peanuts. She has a business which is solvent and doing fine but both parents are late 50s early 60s so starting again with a mortgage for mum or renting is going to be difficult. She is now concerned that we will have to put her dogs to sleep as she may not be able to find a rented house allowing pets. just depends on the amount of equity she retains.


If we manage to get a reasonable size place then hopefully we can help until they are back on their feet but I just don't know.


scared for them