Sole Bankruptcy with a soletrading business

Lockylocky10

Hi,

I’m looking for a bit of advice for a family member if possible. They’re really struggling with meeting ends meet at the end of every month, without going into to much detail.

They own two sole trading businesses (beauty salons) but have been looking into declaring themselves bankrupt to clear existing debt and essentially be able to start a fresh. The only thing stopping them is they’ve been told conflicting information.

Is anyone able to shine some light please? If they were to declare themselves bankrupt, would they end up losing their businesses?

Thank you, sorry if I haven’t provided enough information.

debt_doctor

Hi,

You can trade as a sole trader during bankruptcy but you must trade either in your own personal name or the trading name you went bankrupt in.

However, beware - any stock you hold will be seized and sold (or an offer made to keep it from a 3rd party) and the business may well have a resale value (customer base etc) which could be seen as an asset and therefore the OR may want paying for that.

DD

maxmycardagain

can a S/T "own" two identical businesses?

any debts owed to the businesses would be an asset, any bank balance also, any stock would also be classed as an asset but removal/storage/disposal costs would eat away at the trade value

BR for a S/T is not the debt-beater it is for a Ltd company and/or director...

debt_doctor

maxmycardagain wrote: »

can a S/T "own" two identical businesses?

any debts owed to the businesses would be an asset, any bank balance also, any stock would also be classed as an asset but removal/storage/disposal costs would eat away at the trade value

BR for a S/T is not the debt-beater it is for a Ltd company and/or director...

A sole trader doesn't own any business, they simply trade under their own name (typically taxi drivers and others) or in a style such as Fred Blogs Trading as 'a cut above' hairdressers.

In such a case, business debt is personal debt, there is no distinction.

An individual can trade in more than one style at a time.

All business debts (which are also personal debts) for a sole trader are covered by bankruptcy - the main difference to that of a LTD co. is that personal assets are USUALLY protected when you are a company director, as a sole trader there is no such protection.

DD