My business is going Bankrupt

lilacgirl_2

Hi all,

A long one for you so please read on and offer any advice...

My partner has run a van sales business for the past 3 years and about 3 months ago we decided to buy another round in a different area with the hope of employing a driver to work on it f/t.

We had to take a business loan out for £25k to purchase it, the accounts for the business showed a turnover of £317k pa with a gross profit of 14%, we did our sums/overheads and thought that we would be able to afford the repayments and extra warehouse space we leased.

After only 6 weeks of having the new round we have lost almost half of the customers and we're lucky to take £2k per week in sales which would only equate to £104k pa turnover. We have also discovered from one of our new suppliers that the previous owner had complained earlier in the year of low sales. We believe he glorified his figures/invoices to show a healthy business but we have no way of proving this.

If things continue we will start defaulting on the loan and unit lease, the extra overheads that should be paid for by the new round are having a knock on effect onto our exisiting business, this is making it hard for us to pay our other business overheads and our suppliers who we have built a good relationship with as we are not receiving the expected figures.

In total we are in debt with just over £50k, 2 business loans, 1 personal loan and a credit card - everything financial is in joint names.

We are now thinking about going down the bankruptcy route to salvage our exisiting business, we have worked tirelessly over the last 3 years to make our business work and it seems one bad error judgement of buying this new business could destroy everything for us.

If we file a petition for bankruptcy what will we lose? we're not homeowners only private tenants so dont risk our home being reprocessed. we have 2 vans and 1 car and we only own 1 of the vans outright.

I work for another company part time as the business is run solely by my partner, if we file bankruptcy will i lose my bank account? what will happen to my utility bills which are also paid out of my salary by direct debit? hubby has never taken a wage due to the huge overheads.

we have a daughter at nursery, how do i make sure my wage which is paid into my personal account to pay the nursery is not taken out by the bank (thats who we took the personal loan through)?

Could we start trading again and try and pick up the pieces or would my partner be forced to work for someone else and never be a sole trader again?

We couldnt even sell the new round as its lost half its value and we'd still not be able to afford the repayments from our exisiting business.

Please can anyone offer advice on what steps we should take to make this messy situation better

Thanks in advance Lilac x

So_Sad_Angel

Hi Lilac...good to see you Honey, take deep breaths & know that you are taking steps to resolve the situation.

Complicated stuff...can I ask are you both going down the BR route? as you may not keep the existing business if it is Ltd Co. (Sole trader OK)

Call Nat Debtline & ask for Business section...they are v good. Otherwise can your accountant offer options?

In terms of personal accounts you will need a seperate account to continue after BR date...such as Coop or Barclays basic but both can pay ddrs etc.

Keep reading others` posts & build up knowledge...it really helps clear the mind. Remember BR is last resort...please exhaust all other avenues first.

Take care, Angelx

philnicandamy

http://www.bdl.org.uk/ (business debtline)

National Debtline

http://www.nationaldebtline.co.uk/

Both these debt helplines are free & will be able to help with advice and support on what to do next

meanwhile post away & we'll try to help

maxmycardagain

After only 6 weeks of having the new round we have lost almost half of the customers and we're lucky to take £2k per week in sales which would only equate to £104k pa turnover. We have also discovered from one of our new suppliers that the previous owner had complained earlier in the year of low sales. We believe he glorified his figures/invoices to show a healthy business but we have no way of proving this.

Did you get his accounts verified by his bank and/or accountant, it could be you have a case if you can prove beyond doubt he lied, but take legal advice first

If things continue we will start defaulting on the loan and unit lease, the extra overheads that should be paid for by the new round are having a knock on effect onto our exisiting business, this is making it hard for us to pay our other business overheads and our suppliers who we have built a good relationship with as we are not receiving the expected figures.

In total we are in debt with just over £50k, 2 business loans, 1 personal loan and a credit card - everything financial is in joint names.

We are now thinking about going down the bankruptcy route to salvage our exisiting business, we have worked tirelessly over the last 3 years to make our business work and it seems one bad error judgement of buying this new business could destroy everything for us.

If we file a petition for bankruptcy what will we lose? we're not homeowners only private tenants so dont risk our home being reprocessed. we have 2 vans and 1 car and we only own 1 of the vans outright.

"Tools of the trade" are generally exempt, thats assuming you decide to trade on

Some private landlords have a "no-BR's clause in the tenancy, have a look

I work for another company part time as the business is run solely by my partner, if we file bankruptcy will i lose my bank account? what will happen to my utility bills which are also paid out of my salary by direct debit? hubby has never taken a wage due to the huge overheads.

Bank accounts in the main are frozen to you after BR

we have a daughter at nursery, how do i make sure my wage which is paid into my personal account to pay the nursery is not taken out by the bank (thats who we took the personal loan through)?

They usually have the right to blag your monies, but you can open a post-BR account at Barclays or the Co-op

Could we start trading again and try and pick up the pieces or would my partner be forced to work for someone else and never be a sole trader again?

You can carry on trading as you are now, in the same name only, IF you think its wise....

How do you pay for fuel? with two vans is your cash enough to keep them running, are your sales cash or on account? 30 days/60 days? its a long wait when youve gotta pay for fuel/tyres/etc as you use them

We couldnt even sell the new round as its lost half its value and we'd still not be able to afford the repayments from our exisiting business.

have you a full time driver? is he on commission or flat rate?

ref your warehousing, dont default on the rent if you have stock in there as the site owner can lock you out, which wouldnt help your sales

if you both go BR (as it seems you would have to) you would have to pay 2 lots of fees, just under £1000 unless you qualify to save £300 (between you) if your on low incomes/tax credits,etc.

I was about to suggest you speak to your lenders, but a mate did just that to HSBC and by the time he got home his account was frozen!

lilacgirl_2

Hi,

Thanks all for your advice.

I contacted the National Debtline yesterday and spoke to a lovely lady who advised me of our options. We're thinking of going down the IVA route and in the meantime we've set up another personal bank account with a different bank to stop them taking loan payments etc.. over my utility bills.

Will check other posts ref to IVA's and have a look at other peoples experiences with them, the best bit would be that we would be debt free in 5 years time - that to us seems like a huge weight would be lifted.

Thanks again all, would have replied sooner just havent had the time to check back on here.

Take care Lilac

maxmycardagain

they did tell you that an IVA is logged on your credit file and is also on the IS website as public information? in that respect it will impact on you next 6 years by way of a bad credit risk assessment

Mips

My husband was told he can continue trading in the same name but ONLY IF IT CAN BE RUN AT A PROFIT.

maxmycardagain

Dippychick wrote: »

My husband was told he can continue trading in the same name but ONLY IF IT CAN BE RUN AT A PROFIT.

well, obviously, if theres no profit theres no point!

if we had crystal balls, etc...


can u pm me please....

lilacgirl_2

Just a thought...

Could I make our business (partnership) into a Limited company? and hope this way our business would be saved?

I'm just so confused as to whether to go IVA or BR

I've done our budget and at the mo we have -£250 ish to offer our creditors if we go down the IVA route

dalip

Hi
Before you go down the IVA route can i ask who you are thinking of doing it with. There are a lot of companies offering IVA's at the minute which take a high % of the money you pay into it. Credtors are also getting tough on these IVA's and asking for at least 27p in the pound back. On a 50k debt £250 does not seem enough. We(OH and myself)looked into doing an IVA and on that amout of debt they(IVA comapny)wanted over £500 a mth of us:eek: .D

lilacgirl_2

We havent looked into any IVA companies yet as I've got to call debtline back with our budget figures

Me and the partner figured if the creditors refuse to accept what we have to offer then its def the BR route

we have a van which is owned outright (worth only £500 but it could keep the business afloat) do you think we could change the ownership of the vehicle into a friends name to stop the creditors taking it from us?

a few years back we decided to go LTD and about 2 months after this we later decided against it for tax purposes, do you think its possible to reverse this and have us trade as LTD again to stop the crediors taking our personal possessions or would this be frowned upon by the courts/BR people?

Cheers Lilac