Partnership business failing

Rainbows_after_storm

Hi, 

im not sure if this is the right place to post but we have a family business (parents and child) and we are due to run out of cash flow. 

We owe nearly 600k of debt, however we do have assets, including a building that we own but we have a loan secured on this. 

The building is worth around 300k with the loan value of 170k attached. 

We have an cibils loan (80k remaining) and a loan of 17k that has a personal guarantee. We owe the VAT and NI 15k in total and the rest is unsecured debt.

Both me and my parents own our houses (my parents are in their 70’s) and I have young children at home. I have a joint mortgage with my partner (not married) 

my questions are:
when the business runs out of money, will we be liable for the full 600k which will of course put us bankrupt? 

If we go bankrupt will my parents and I lose our houses?

What if anything are our other options away from bankruptcy please? 

DE_612183

• Partners are jointly liable for all debts and obligations incurred while they are a partner 

Hoenir

What makes up the remainder of the £600k owed ? 

Tucosalamanca

It's hard to say without knowing full details.

I would urge to you see an accountant at the earliest opportunity, to establish the scope of your problems and how to escape in the least painful way.
Perhaps, not your current one though, as they don't appear to have been doing a very good job...

Almost all of the issues wouldn't be a problem if you had formed a limited company rather than a partnership.

Who has been advising you?

Rainbows_after_storm

Hoenir said:

What makes up the remainder of the £600k owed ? 

Credit cards 30k
overdraft 50k
rates 10k
suppliers150k
family loans 80k

Rainbows_after_storm

Tucosalamanca said:

It's hard to say without knowing full details.

I would urge to you see an accountant at the earliest opportunity, to establish the scope of your problems and how to escape in the least painful way.
Perhaps, not your current one though, as they don't appear to have been doing a very good job...

Almost all of the issues wouldn't be a problem if you had formed a limited company rather than a partnership.

Who has been advising you?

The accountant told us before all of the debt incurred that we weren’t making enough profit to warrant going Ltd. 

Covid hit and we got the Cbils loan and then we couldn’t go Ltd as the debt was in the partnerships name 

ManyWays

Talking to Business Debtline is always a good idea https://www.businessdebtline.org/

You and your parents also have to look at not nice alternatives.

Presumably the rest of the family may be prepared to write off the 80k if your alternative is bankruptcy when they would get little back?
How much is your house worth, does your partner own half, how large is your mortgage? How much could you earn in a PAYE job?
How much is your parents house worth and do they have a mortgage? How old are they and do they have any pension arrangements? How much could they earn in jobs?

Rainbows_after_storm

ManyWays said:

Presumably the rest of the family may be prepared to write off the 80k if your alternative is bankruptcy when they would get little back?
How much is your house worth, does your partner own half, how large is your mortgage? How much could you earn in a PAYE job?
How much is your parents house worth and do they have a mortgage? How old are they and do they have any pension arrangements? How much could they earn in jobs?

Thank you, I will give them a call. 

Yes I’m sure that the family will be supportive and I would personally pay them back once I got a new job (even on NLW I would earn so much more than I do now!!) 

My partner owns half the house, there is a mortgage of 80k left on our house and it’s probably worth around 250k. 

My parents house is probably worth 300k, there is no mortgage. They are both in there 70’s. My mum receives state pension, my dad also receives £150 per month from a private pension. 

Thank you 

ManyWays

ok so these are long shots but worth exploring as I am assuming Business Debtline doesnt have a great solution.

It sounds as though you have about 85k equity in your house. Is there anyone in your family or your partner's that could buy that back from the official receiver so that you can keep your home? If not, your house would have to be sold but your partner can keep their 85k of equity. 

Obviously your parents house is a lot more money, any chance of the family buying that? Or does anyone in the family own somewhere they could rent? if there isn't, presumably someone in the family could act as guarantor, so your parents could rent somewhere when bankrupt, at that point they may be able to get some benefits to help them manage. 

Rainbows_after_storm

Thank you all for your comments, it’s really scary and nothing that I have ever thought to look into before! 

I have a meeting with a liquidator on Monday and hopefully the hell will be over soon