Considering IVA but possible settlement in future...

sillymee

I have managed to get myself in quite a lot of debt when starting up my own business. Although I wasn't initially happy with the idea, eventually, I came to the conclusion that I should apply for an IVA. I have been dealing with Payplan but have yet to send the all the papers they require. Meanwhile I have been thinking more and more about selling the business and setting up again in a similar (not competing) field. I was surprised today when I had my current business valued at considerably more than I was expecting. Which, should I attain the asking price, would pay of the debts in full and leave me with enough money to set up the new business. Obviosuly this is likely to take some time - probably about 9 months according to the agent. Would I be best to proceed with the IVA (my credit rating is already dire) and to offer a full and final settlement if/when I sell - does anyone have any idea what they would be likely to accept? Or, should I tell the banks of my intention to sell and offer a settlement at that time whilst offering token payments meanwhile. I would assume they would expect full payment in this case or may they accept a lower amount? I'm not trying to get our of paying what I owe but the charges and interest rates have been extortionate. I was going to try to claim them back but I'm aware there has now been a change in legislation...

Any help greatly appreciated

raino144

An IVA will usually involve a 'nominee fee' from the Insolvency Practicioner who would have to sign off on it of min £2.5k and (more reallistically) £4-5k

It will also drastically affect your credit rating (one step short of bankruptcy) and will impede your ability to do business for the forseeable future (well beyond what a poor credit rating will currently do).

Take advice from CCCS if needs be but be aware IVAs are a measure of last resort and are not suitable to give yourself a short term breathing space as the costs and implications are too severe (especially when the lenders see they will make a significant % recovery).

Sorry if my reply appears to be harsh but there are consequences to entering into an IVA which you may not have considered.

Edit: CCCS will be able to help with negotiating payments with creditors / a 'freeze' on interest and charges whilst the sale goes through. This will put you in a much stronger position when selling your business - a distressed sale never gets the true value of what you have.

sillymee

Thank you for your response. I am currently receiving advice from Payplan and Business Debtline but I wanted to get some feedback from here before letting them know I am considering selling. Although the debts have built up due to the business they are all 'personal' debts. I am well aware of the implications of an IVA but I've already been given six months where my creditors have accepted nominal payments and worried should a sale not be agreed I will still be in the same position in six or twelve months time where I could be 'further down the line' with an IVA. Although the valuation on my business was far better than I ever hoped for I'm not particularly confident it will sell at close to the asking price, which may not leave me with enough money to set up a new business after clearing my existing debts.