Liquidation, Personal Guarantees, and Individual Voluntary Arrangement….

2 men sitting in office in conversation

During  the summer of 2023 PBC Business Recovery & Insolvency were in discussion with a director whose company was to go into liquidation.  It became apparent that he had provided a significant number of personal guarantees to company creditors that would crystallise and, with no dividend being paid from the liquidation, the guaranteed debt would fall on the director in its entirety.  The director was clearly concerned as to the consequences and we provided advice on how best he deal with these liabilities going forward – it was clear that it would be a choice of either Bankruptcy or propose an Individual Voluntary Arrangement (“IVA”)

Given our experience in dealing with personal insolvency and the fact that one creditor would have a significant vote if an IVA was to be approved, we approached that creditor, informally,  with a summary of the IVA to gauge their appetite to agree. We are pleased to report that the IVA was approved in October 2023 and the IVA has now been concluded 6 months on with the funds distributed to all creditors, resulting in the director being able to move forward.

If you require advice or assistance on any insolvency-related issue, then please contact PBC Business Recovery & Insolvency to discuss your situation on 01604 212150 (Northampton), 01908 488653 (Milton Keynes) or email to Alternatively, visit for further information.

Are we heading for an economic cliff?

How prepared are you for when the COVID-related financial support and other interim measures fall away? 

With the impact of COVID the Government laid down, what was to become the Corporate Insolvency & Governance Act 2020 (“CIGA”) which became law in June 2020 and had retrospective effect to March 2020.  CIGA was seen as a balancing act between the detrimental impact the severe restrictions would have for trading on one hand against shielding business from depleted cash flow on the other.

In January the House of Lords debated over the continued restrictions on creditor enforcement imposed by CIGA.  These restrictions were intended to expire on 30 September but were extended to 31 December and subsequently 31 March 2021.  In general, the restrictions prevented the service of statutory demands/winding up petitions, landlord enforcement and suspended wrongful trading provisions.  As a result of these restrictions, the latest data suggests an unprecedented level of debt has accrued, including over £4.5 billion in rent arrears.

Furthermore, there is an estimated £70 billion of Government-backed lending, together with deferred tax liabilities, which is most likely going to make HM Revenue & Customs (“HMRC”) a major creditor in most insolvencies, resulting in them having significant influence on the destiny of businesses.  This influence is made all the greater following the upgrading of HMRC to secondary preferential status when formal insolvency is required.

So, what is the good news?

Well, the Government have announced an easing of bounce back loan repayments in an effort to ease cash flow demands.  In addition, recognising the resulting position of HMRC and the detrimental effect COVID has caused generally, the House of Lords have stressed HMRC need to be co-operative and engaging with a supportive approach on proposed COVID-affected corporate restructuring.  Clearly, time will tell on this recommendation and I would say this commercial understanding needs to be wider by including landlords and credit controllers who are all seeking recoveries.

I asked in the title whether we are heading towards an economic cliff.  Personally, I would suggest “Normal” (whatever that is) will not occur over night.  So, rather than a cliff as COVID restrictions ease off, maybe the economy will experience a gradual slope.

Whatever the outcome businesses need to be pro-active.  Review your cash flow and look at ways of reducing overheads, particularly while your turnover gradually starts to return to pre-COVID levels.  You should engage with your creditors and for those who are owed money, a commercial understanding is going to be the order of the day.  If all fails, the advice has to be to seek early advice.  It is no coincidence those who do seek early advice find they have more options available then those who leave it until the last minute.  As a Scout will say, “Be prepared.”

Should you have an insolvency-related issue then please contact me at PBC Business Recovery & Insolvency on (01604) 212150 (Northampton office) or (01234) 834886 (Bedford office). Alternatively, you may send an email to or access our website at

A personal problem?


Invariably, when we talk about insolvency people start thinking of the likes of BHS, Toys “R” Us and other large corporate concerns. However, what about a problem that is closer to home?

The Insolvency Service recently released the statistics for Q2 of 2018. These show corporate insolvency numbers were down on the previous quarter (although still higher than the equivalent period of 2017) whereas personal insolvency reached its highest level since 2012.  In fact, in the 12 months ended 30 June 2018, 1 in every 433 adults in the UK entered some form of personal insolvency.

What is interesting is the number of individual voluntary arrangements (in short, a deal with your creditors) continue to exceed bankruptcies. The reason for this could be in 2015 the minimum debt for which you can petition for someone to be made bankrupt increased from £750 to £5,000.  Alternatively, it is more likely people are taking responsibility for addressing accrued personal debt and seek to enter into an IVA as a means of managing their affairs.  A recent profile case is that of Katie Price (aka Jordan) whose bankruptcy hearing was adjourned while her advisors look at the viability of her entering into an IVA.  You have to wonder how someone previously reported as being worth £45 million finds themselves in that position but it does demonstrate it can happen to anyone.

It is very simple to say people who fall into personal insolvency were reckless and spent beyond their means. However, examples I have handled include:

  • A solicitor who was hit with partnership liabilities two years after he had left the partnership.
  • Directors whose company fails resulting in personal guarantee liabilities arising.
  • The legacy of ill health or a divorce.
  • Redundancy causing a dramatic reduction in household income.

It seems, these days, people who end up falling into bankruptcy are either those who have simply nothing material to lose (or offer to creditors) or have buried their head and just let the level of creditor antagonism increase to the point of no return. Invariably, those who PBC have assisted find putting a proposal to creditors for an IVA far more likely to succeed than someone who has delayed, procrastinated or simply frustrated creditors to a point they lose any sympathy when it comes down to voting.  The message remains as always, the sooner you take advice the better the situation is likely to be.

Should you require any advice or assistance with your financial affairs then please contact either Gary Pettit or Gavin Bates at PBC Business Recovery & Insolvency 

A Stark Lesson

How many readers find themselves looking at how much to pay in order to service personal debt every month after you have just been paid? In some cases that level reaches a point where it simply cannot be managed where you then start to notice those road-side signs that promise to write off 90% of your debt a little more.

Some will ignore those assurances and seek advice early. This could result in an application for your own bankruptcy where others will consult with an insolvency practitioner (“IP”) with a view to entering into an individual voluntary arrangement (“IVA”).  An IVA is, in laypersons’ terms, a deal with your creditors that is regulated and is a settlement in full and final satisfaction of your liabilities.  Indeed, over the past six years IVA have consistently outnumbered the number of bankruptcy orders, demonstrating more people are looking to resolve their debt burden.

However, a far greater majority of people look towards debt management plans (“DMP”) as their solution. While I have my own misgivings, for many people a DMP works and they get themselves back on a level footing.  Unfortunately, I have also seen many where it does not work and those people end up going bankrupt or, in some cases, enter into an IVA.

One issue that arises with companies who offer DMP is the lack of “Insolvency-like” regulation. Every IP has to be licensed through a professional body and are regulated by statute, their professional body and the Government through the Insolvency Service.  IPs also have professional guidelines to follow and are insured so there is recourse if things go wrong.  If you are wondering why you should take heed of this fundamental difference then you only have to look at the recently reported case of Gregson and Brooke Financial Services Limited and One Tick Limited.

Both Gregsons and One Tick offered a debt management service where clients would pay into a DMP. Clients complained to the Financial Conduct Authority (who governed both companies) that despite paying into their DMP their debt was increasing.  After some initial enquiries by the FCA both companies went into administration after which it was discovered the directors had withdrawn some £652,000 of client money for their own benefit.  While all four directors have been disqualified as directors, the true victims are the debt-ridden clients who now find they are in deeper financial trouble than before, despite making significant debt repayments; payments that would have been covered by IP insurance under a formal insolvency procedure.

The Association of Business Recovery Professionals have been so concerned with this (growing) problem they have published two guides:

“Don’t be misled by advice from an unlicensed advisor”

“My business is in financial difficulty”

These can be found on the Association’s website ( or on our website at

In short, if you find yourself in a position where the ability to service your debt is getting to (or has reached) a point of no return seek professional advice from an IP. With most practices, the first consultation is free of charge and could save you a lot of stress, anguish and, like the poor victims of the above companies, expense.


PBC are pleased to announce a first and final dividend to creditors from an individual voluntary arrangement (IVA).

The debtor’s proposals for an IVA were approved in November 2017 and comprised a lump sum following the sale of an investment property. The arrangement included the removal of a second charge against the dwelling property, with the creditor in question submitting a claim in the IVA.

Joint Supervisor, Gary Pettit said, “It is pleasing to see this dividend paid to creditors and the IVA nearing a successful completion. The IVA has successfully dealt with the debtor’s financial difficulties, which were not helped by the debt management plan he was previously using”.

For more information on IVAs, please see this video.

A Round Up of Recent Insolvency Statistics and Perhaps More Trouble Ahead!

Last week The Insolvency Service released the insolvency statistics for the fourth quarter of 2017. Whenever these are published, the newspapers will always look for the story without going into the details.

So for example, the press reported that personal insolvencies in 2017 increased by 9% as compared to 2016, Of course that is correct, but they didn’t report that personal insolvencies fell by 11% in Q4 2017 as compared to Q3.

It is of course true that when inflation is higher than increases in wages then it will have an effect on individuals’ surplus income and in many cases (99,196 in 2017), will lead to personal insolvencies. In the short term this is expected to continue.

Another story that didn’t seem to hit the headlines was a 2.5% rise in corporate insolvencies in 2017 as compared to 2016. First this is a small increase in any event. However, it should also be noted that corporate insolvencies have been at a historically low number for a few years now, so a small increase on what is already a small number is not worth mentioning.

So this all seems like reasonably good news for the economy as a whole. On face value it does but at PBC we are starting to see growing signs of trouble ahead.  Over the last 3 months we have seen a growing number of enquiries and work.  It is fair to say that the retail sector (the high street in particular), is struggling, partially because of the reduction in personal incomes., and also businesses which deal with discretionary spend items (for example, new car sales are down).

At some stage we also expect fallout from the Carillion failure as subcontractors and those further down the chain come to terms with the lost income and future work.

It was also interesting to see that the FCA has started to address the issue of interest only mortgages. The FCA estimate there are 1.67 million full interest only and part capital repayment mortgages in the UK and the most of these will conclude in the next 10 to 14 years. Clearly as these come to a conclusion it will have an effect on those consumers and therefore the economy.  Only time will tell.

As always if you or your business is starting to struggle we would always recommend that you take advice at an early stage. Initial meetings with PBC are free and confidential.

When are creditors paid?

When a company or person is going through a financially difficult time common questions which occur are who will get paid and when? Many people often have a vested interest in a company and there is a very clear order in which they will appear in the order of payment. While this is sometimes frustrating it is a legal requirement and cannot be changed. In this video Gary Pettit, one of our directors and a licensed insolvency practitioner here at PBC, takes you through the basics of what will happen and who will be paid at what point in the process. He will also look briefly at the different ramifications of areas such partnerships and limited companies. As always the advice is to contact us if you feel we can help but this video should clear up some of the more regular questions we hear about payment before, during and after insolvency procedures.

PBC announce interim dividend from an IVA

PBC are pleased to announce an interim distribution from an individual voluntary arrangement.

The debtor’s proposals were approved by creditors with modifications on 29 June 2016. The debtor has proposed monthly contributions together with 50% of commissions earned over £500 to her creditors, which are currently up to date.  The proposals anticipated dividends to creditors at each anniversary of the arrangement and I am pleased to report payment of a first interim dividend of 7.60 pence in the pound, as estimated, to unsecured creditors.

The debtor’s monthly contributions are continuing to be monitored, together with her commissions earned and a second interim dividend of 10 pence in the pound is expected to be made to creditors at the second anniversary of the arrangement in June 2018.

For more information on voluntary arrangements, please see the video here.

What is a Voluntary Arrangement?

Voluntary Arrangements (VAs) are not a universal panacea for financial difficulties but they can be a way of resolving your financial issues to the satisfaction of everyone concerned. In this video licensed insolvency practitioner and director here at PBC, Gary Pettit, will explain what a voluntary arrangement is and what it can do.  Many people are aware of the basics of a VA but are unsure of a range of specifics such as can a company have a voluntary arrangement and do all creditors have to abide by the terms of a voluntary arrangement?  Gary will answer some of the more common questions we are asked about VAs and how they are used.

Ever Decreasing Circles

‘Living beyond means’ – a leading cause of bankruptcy

When you think of Ali Campbell you think of UB40, Shane Filan, Westlife and Martine McCutcheon may bring back memories of “Eastenders”. What they all have in common is being made bankrupt, which goes to prove cash is king.

There is an old joke about the husband who did not report his wife’s card stolen because the thief was spending less than she did. Excluding mortgages, household borrowing in the UK rose to £198 billion and with car financing increasing by 15% and credit card debt by 10% this represents the fastest growth in debt levels since 2005.  Statisticians suggest the average household could last just 32 days without any income and that more than 22% have savings below £500.

This depressing picture is indicative of how austerity has impacted on the general public. However, it does not reflect the true picture because the reports on personal debt do not include “Hidden” liabilities such as personal guarantees for third party borrowing or directors over-drawing on their loan accounts.  The worst case I have seen so far was a former partner of a failed legal practice whose Christmas present in 2014 were demands amounting to £11 million.  Try explaining that to your spouse!

At PBC we see people with personal debts ranging from less than £10,000 up to the poor sole mentioned above. Regardless of the quantum of debt they all endure the same; demand letters, High Court Enforcement Officers, threats of bankruptcy etc.  Admittedly, there are some who consult PBC where bankruptcy is the best option for that individual due to the overall circumstances.  Others, like our client with the unwanted Christmas present, entering into an individual voluntary arrangement (“IVA”) provided certainty and protected his career.

As implied, an IVA is not right for everyone. It is a deal with your creditors; a balanced compromise where there are benefits for both the client and their creditors and demonstrates being more beneficial than bankruptcy.  The key component from the client perspective is you must have something to offer, whether that is an income contribution or tangible offers, or a combination of both.

The principle message has (and will always be) take advice early. The longer you leave debt-related problems the more antagonised your creditors will become, the more cumbersome the debt and the less creditors will be persuaded to support any form of compromise you may wish to put forward.