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An Alternative to Bankruptcy

Background

  • The individual was a director of a limited company and this was his source of income
  • He jointly owned his family home along with his wife
  • He also had two children living in the property
  • He had accrued debts totalling £120,000 during the period he was previously self-employed
  • He had shares in his limited company although they were not worth a significant amount

Problem

  • The individual did not want to become bankrupt as he would have to resign as a director of the limited company
  • He wanted to remain in control of the family home so that he could to reside there with his wife and children
  • He did not have sufficient assets to enable him to repay his creditors in full and therefore avoid an insolvency procedure
  • Interest was continuing to accrue on his debts meaning that paying these off was becoming more stressful and keeping up with payments became impossible
  • Various creditors were threatening to petition for the individual’s bankruptcy and therefore immediate action was required

Solution

  • A member of Parker Andrews staff met with the individual and his wife to discuss the options available in particular with reference to the property and the viability of an IVA
  • Parker Andrews were instructed to assist with the preparation of the IVA proposal, and whilst this was being prepared, made an application for an interim order to ensure no further action could be taken in respect of creditors petitioning for the individual’s bankruptcy
  • The proposal was sent to all creditors along with the report of the insolvency practitioner acting as Nominee, which detailed the anticipated feasibility of the IVA and predicted outcome to creditors
  • Prior to the meeting Parker Andrews liaised with creditors to answer any queries they had regarding the proposed IVA
  • A meeting of creditors was called to consider the proposal
  • Parker Andrews staff attended the meeting alongside the debtor

Conclusion

  • The proposal was approved, allowing within the terms for the individual to make contributions from his income into the IVA in settlement of his debts
  • The approved proposal also allowed him to remain in control of his property along with his wife
  • The individual was able to continue acting as a director of the limited company and therefore this could continue trading and providing him and his family with an income
  • Creditors were dealt with by Parker Andrews and all pressure and enforcement by creditors ceased
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