Self employed + bankruptcy

whoopsydaisy

Hi,

I don't want to panic you, but I do want to add my personal experience, before you make any decisions.

I was a soletrader, with an online business. I had approximately £3000 worth of stock at the time of my bankruptcy 3 weeks ago as i'd been running it down to pay my debts.

I also phoned business debtline and was told there was a strong possibility that I could fight to keep my business in bankruptcy as it was making enough of a profit to give me an IPA, and therefore keep my creditors happy!

However when it came to it, 2 hours after being declared bankrupt I was phoned by the official reciever and told that there was no way that I would be allowed to keep my business, the liquidator came to take all of my stock, fixtures and fittings and even the clothes hangers! 2 days later.

I was also told that they would close my website down. This upset me a bit, because I had put a lot of time and effort into this and wanted to keep it so that when I was in the position too I could start back up again.

My brother has been negotiating with the liquidator and the OR to buy the business back (i'm obviously not allowed) more horrifryingly though I thought that I had the copyright on the Logo, name, website etc.. but Fermi found me some information the other day saying this was not so.

I have found out that the liquidator is trying to sell the business lock, stock and barrel- name, logo, stock to the highest bidder, and my brother does not get preferential treatment as all they want is the most money they can get for the creditors.

This has been the saddest thing for me, as I thought that I didn't care about it, so my advise is, be prepared to let it go, but if it's your only source of income put up a good fight. (I think that I lost mine because I had aranged a part-time job to try to cover my outgoings when my business started to fail.)

Like I said, I don't want to panic you, but I wish i'd known this before I went bankrupt.

radarjay

Whoopsydaisy thank you for your post - that is so sad.

I'm wondering in this case whether to sell/sign over the website & business to a family member after Christmas trading finishes in this case as I have worked so hard over the last 18 months to build this business up. Then have it signed back over to me after BR in January? As its just a sole trader business I can't find anything in BR law that says that this isn't allowed, unless I haven't searched properly.

Argh this is a nightmare - I also bought another sole trader business in Feb this year so the thought of loosing both business is awful.

Seeing as I've read threads where people have started up in sole trade business straight after being made bankrupt surely this must be allowed? Or have I misunderstood and would have to wait until after discharge?

whoopsydaisy

I believe that you are allowed to carry on as soon as you are declared (my plan once I have enough capital, although i'm planning again already!), obviously you can't get credit for more than £500 without telling the OR.

I think that signing over your business will be "disposing of an asset" and therefore will be seriously frowned upon once you get to bankruptcy (possible BRO??). What you could do which is what I wish that i'd done if i'd known about it (and is very sneaky, but not sure if illegal?) is do a transfer of ownership for the domain name of your business. It costs £35 and means your domain name will be owned by someone else and not you, which I think would means your website could not be taken as it doesn't belong to you. I'd go along the lines of "I wasn't sure if I could regularly continue paying for the shopping cart facility, so made sure the money came from XXX bank account in order that it didn't get shut down" I would speak to your shopping cart providers, mine seemed to know an awful lot more than I did!

radarjay

But is a business that is making a loss an asset? Obviously I don't want to do anything illegal but for reasons I won't go in to here I have to stay at home to work. The only reason it is making a loss this year is because I have invested heavily in stock and expanding lines and taking on new suppliers and software too for stock management plus of course a total re-design of the business. I'm hoping that in my next year of trading (next April) I will be making some profit.

My actual shopping cart is open source software and the design has been done for me by a designer. The only monthly costs the website has itself that are ongoing are the monthly hosting fees payable to the designer who is also the host.

I think there is also a possibility that I can get most of suppliers to change my account to a drop ship one so I'd hold no stock.

whoopsydaisy

Have you spoken to Business Link? or contacted Lawyers for Your Business (not sure of the numbers but i'm sure they'll have websites!) My business was making a small profit, but like you this was only small because I was paying out a small fortune on loans and credit cards for the (unaffordable!) investments i'd made, but still there was no chance of me keeping it.

I found this on the insolvency service website when I was considering bankruptcy, which is why i didn't sign over my business before. "The trustee may apply to the court for an order restoring property to him or her if you disposed of it in a way which was unfair to your creditors (for example, if before bankruptcy you had transferred property to a relative for less than its worth)." Again though, i'm no expert, ... maybe someone can come along who might know??