Bankruptcy and keeping a business going... Advice please

Flask_of_tea_in_the_car

I have taken advice from Business Debt line etc so this is more asking for peoples experiences rather than "the rules".

We are a husband and wife couple with a business partnership. Over the years we have gathered a very high level of debt, mostly personal through trying to build the business up (husband leaving job to work for business etc) and house moves, having children etc.

It has now got to an unmanageable level but we want to keep the business going as it provides an income for us which although not high it is reasonable for us with our large family! (aprox 30k)

All we want it a solution which is legal, do-able and not insanely stressful (as thats how I feel now!).


We have so many options...

1. Husband can become sole trader and I will be unemployed. I will go bankrupt and husband can try and pay his personal debts off (2/3's are in my name)
He would though then be responsible for all our partnership debts etc

2. We can go Ltd, I can be an employee and go bankrupt and husband can try and pay his personal debts off (2/3's are in my name)
He would though then be responsible for all our partnership debts etc

3. We can go Ltd, I can be an employee and go bankrupt and husband can take out an IVA (as I think options 1 and 2 would be possibly a very tall order!)

4. We can go Ltd, I can be an employee and go bankrupt and husband can take out an IVA or just keep paying debts with a view to going Bankrupt after I am released so I can take over running the business.

5. We can go Ltd & both take out an IVA


My concerns are:

We are a simple retail business so the only value is stock on hand but the business also has debt so would one discount the other? Would the business have to pay me half the stock value etc? In people experience how does the OR 'value' your business?

Would I get 'in trouble' for leaving the business in order to protect it? (even though staying in it would not provide the OR with any money as we do not earn enough).

Not keen on entering into an IVA whilst our income is not guaranteed and is variable.... Also not keen on having income severely restricted for 5 years... not worried about cars and holidays but with a large family just want to be able to pay for swimming lessons etc!

Any non-judgmental experience that anyone wants to share would be very appreciated!

Many Thanks

Cobalt77

Need a little more info:

1. How much debt do you have approximately, and how is it split between you?
2. What is the value of your net assets (i.e. equity in property, vehicles etc)?
3. I'm assuming you have a formal 50:50 partnership. Correct?
4. In terms of debt, how much of it is directly business related? (i.e. how much is on your balance sheet)

Flask_of_tea_in_the_car

Need a little more info:

1. How much debt do you have approximately, and how is it split between you?
70k Personal debt (mostly made up from supporting us as business was growing) - 50k me, 20k husband.
16k Business debt but it is not "bad debt" its just overdraft and a loan with a year left on it...
But as we are a partnership it would have to be lumped in with an IVA


2. What is the value of your net assets (i.e. equity in property, vehicles etc)?
No assets to speak of - car worth 1500...

3. I'm assuming you have a formal 50:50 partnership. Correct? Yes

4. In terms of debt, how much of it is directly business related? (i.e. how much is on your balance sheet)

Answered above... We have suppliers debts but IP said he would try and keep them off the books as such as we need to run the business - I think trading as a ltd will be the only option whatever we do so in this case they would not exist by the time an IVA came about if thats what we choose to do...


I think we are leaning towards me going bankrupt and husband having an IVA but we are concerned about how they will value the business and how much the OR will expect the 'business' to supply the OR with as it doesnt have any money sat around - it will have about 7k worth of stock on hand and a computer but will also have about 7k of suppliers debts...

Thank you

debt_doctor

Hi,


I have concerns about your business in bankruptcy.
A bankruptcy severs a partnership. Your stock is an asset and will be sold, and also your business will have a value and the OR will want his/her beneficial interest from the value of the business.


A couple of years ago I had a client who went bankrupt as a sole trader running a hot/cold sandwich shop.
The OR decided that the business was worth £5k and all of the stock was thrown away (The OR will not take responsibility for perishables or anything that the OR could get any come back from)
The suppliers are your creditors in bankruptcy unless you are / were a LLP? Your supplier creditors could hold title to the stock depending upon how the stock was provided to you.
DD