Personal insolvency, including bankruptcy is something that nobody wants to face. In this video Gavin Bates, one of our directors , explains a little more about what insolvency means, other options to potentially avoid bankruptcy and what could happen if you do need to take the bankruptcy option. Many people come to PBC with questions such as ‘will I lose my house if I take bankruptcy’ and ‘what about my car and other basic needs’ these are difficult questions and the answer will vary depending on your circumstances but we will work with you to make life improve as fast as possible. For many people, the relief of seeing a solution to their issues is the first sign that they are re-stabilising their life and turning the corner towards becoming solvent again. While the road may still be difficult (and we may not always say what you want to hear) talking and taking some advice could be the first step on your journey.
When do I need an Insolvency Practitioner?
Do have a dog but try to bark yourself? They (dogs) are pretty good at it and are certainly better than me so I tend to let them do what they are better at!
So, why is there an apparent reluctance to consult with an insolvency practitioner (“IP”) until the very last minute, if at all? I will say now I have a huge amount of respect for those who come to see me. After all I am a stranger to them and they are being asked to reveal all of their issues on a point of trust I may steer them in the right direction.
Some of the subjects we have been approached to assist on include:
- A customer has gone insolvent and the creditor is unaware of their rights or need guidance on the meaning of documents received.
- A business is being handled by an administrator (or liquidator) and you are interested in the acquisition.
- The IP is telling you that the goods you supplied are going to be sold for the benefit of creditors as a whole but what are your rights?
- An IP is threatening me with all sorts of monetary claims.
- My credit card and other domestic debts are out of control.
- Our company is in financial difficulty.
The insolvency business is a highly specialised area with less than 1,100 appointment-taking IPs in the UK. The governing legislation provides some immense powers such as lifting the corporate veil and pursuing company officers personally for losses resulting from their conduct, the rights of landlords or suppliers can be controlled, or even prevented. Contacting an IP at an early stage may make the necessary route you need to take smoother, it may even mean you have more than one option. Leaving it until things are getting to a critical level often leads to a very costly and damaging outcome.
For those who need convincing, in a case I am looking at a gentleman tried to handle a bankruptcy petition that had been presented against him in person. Because he did not appreciate the court procedures he ended up being made bankrupt. His asset value (home and land) is over double that of his principal debts but he is now facing the prospect of losing his home in order to clear the bankruptcy and the costs inherent with bankruptcy. Had he taken timely advice this could have been avoided and the anticipated cost a fraction of what they are now going to be.
So, the message is clear. IPs are not monsters and are there to bark for you when the highly specialised subject of insolvency comes looming.
If you require any advice or assistance on any insolvency-related matter then please contact Gary Pettit or Gavin Bates at PBC Business Recovery & Insolvency on (01604) 212150.
So what went wrong?
“If you fail to plan then plan to fail”. A well-known phrase that everyone in business should have hanging in a prominent place as a reminder that operating a business carries risk as well as reward.
Nobody takes that brave leap into being self-employed thinking their business will fail within the first two years. However, many start-ups find themselves in difficulties within this time frame, generally as a direct result of a failure to plan. I appreciate I will not win many friends by saying this but the business acumen in this country is poor and the general knowledge required absent. If I had a pound for every time a director referred to the assets of a limited company as his assets when they are actually company property………
Putting it another way, if you build a house on poor foundations then you can expect that house to fall down eventually. Similarly, if you do not start a business on sound footing from the outset you are promoting failure.
This article could dominate several pages if I were to go into any real detail but, generally speaking common areas leading to difficulties in the near future of a start-up include:
- No business plan (including cash flow forecasts) from the outset. If you have a business idea then putting that down in writing should inform you if that idea is viable and what is likely to be the requirements. It also supports any application for third party funding, such as from banks.
- Choosing the wrong trading vehicle (e.g. limited company, partnership etc.).
- Over-borrowing from the outset, leaving start-up costs creating a financial commitment that eventually becomes a burden too great.
- Not registering for VAT or PAYE. In one case I handled the company had been over the VAT threshold requirements for three years yet was not VAT registered. It was one of the grounds for him receiving a custodial sentence!
- Not accounting for receipts and payments properly.
- Entering into contractual obligations without fully understanding the implications.
- No trading terms and conditions upon which to fall upon when things go wrong.
- Not monitoring cash flow. Most business failures have reached a stage where cash is exhausted so they cannot pay the bills.
The advice to any would-be new business owner is to take advice. Speak to an accountant who can help you determine what the appropriate trading vehicle for your business is, assist with VAT registration and guide you through how to ensure your day-to-day accounting is correct. Equally, a commercial solicitor can draw up your terms of trade that maximise protecting your business interests and can steer you with regards to any agreements you are asked to sign. Finally, do not overlook the role of commercial banks as they can assist in the most appropriate form of funding the business, both at start up and going forward.
I use a phrase, “You do not have a dog and yet bark yourself.” Unfortunately, all too often business people come to me and it is clear they have not grasped that concept.
If you require any advice or assistance on mediation matters, or any other insolvency-related issue, then please contact PBC Business Recovery & Insolvency to discuss your situation. Call Gary Pettit or Gavin Bates on 01604 212150 completely confidentially.
PBC announce dividend from liquidation
PBC are pleased to report that having already paid preferential creditors in full a dividend of 9.72 pence in the pound was paid to unsecured creditors of GLA Stroud Limited when it was anticipated no funds would be available.
The company was placed into creditors’ voluntary liquidation on 4 June 2014 after the preceding company voluntary arrangement it had entered failed due to circumstances out of its control.
Joint liquidator, Gary Pettit, said, “Asset realisations in any construction industry insolvency can be complex but in this case they were significantly higher than originally anticipated with the retentions due to the company being recovered with the assistance of Leslie Keats. Also, book debt recoveries were at 95% of the ledger which was achieved by pragmatic negotiation and assisted by good record keeping by the company in the first instance”.
Administration & Creditors’ Voluntary Liquidation
One common mistake that business owners, the press and many others make is to ask ‘is my business bankrupt’ or ‘can my business be bankrupt’. It is only possible for an individual to be bankrupt so a company will go through the process of liquidation or administration. In short, if you are looking at a company that is not in a position to pay the creditors and the situation is clearly not a short term issue then you may need to enter administration or liquidate.
This video clearly explains what the different processes are and Gavin Bates, one of our licenced insolvency practitioners with over 25 years experience, takes you through your options.
Northamptonshire Business Leader to Take Centre Stage at National Awards
A leading Northamptonshire businessman will take centre stage at national awards that will take place at Wembley stadium.
Gary Pettit, the managing director of PBC Business Recovery has been selected as a judge for the SME National Business Awards 2017 which were launched in July 2017 as a result of the continued success of the SME Business Awards around the UK.
The awards are directed at SMEs which at 98% of all businesses are the main engine of the UK economy.
“I am delighted both personally and for PBC Business Recovery that we have been asked to undertake such an important role in this influential and prestigious Awards.” said Gary.
PBC Business Recovery and Insolvency is a specialist business rescue and insolvency practice that provides practical, helpful advice and solutions to a variety of businesses and individuals with financial problems.
“Entering awards are a fantastic way to grow any business.” Gary continued. “An SME only needs to reach the finals of the awards to experience their profile and their promotional opportunities.”
“This is a great opportunity for SMEs from across Northamptonshire to get to Wembley later this year and be part of an amazing evening that will see the cream of UK business crowned.”
Businesses can enter up to 3 categories. There will be a selection of highly experienced and respected judges and each entry is judged by up to 4 of our panel.
Finalists will be chosen following the preliminary judging and they will be announced online on 4th October 2017.
The awards will culminate in a glitzy black-tie final at the iconic Wembley stadium on 1st December 2017.
The evening of celebration will recognise all the finalists and allow every business that reaches the final the opportunity to promote their incredible achievement.
Further information on the awards can be found at www.smenationals.co.uk
You can watch a video promoting the Awards at https://youtu.be/SdKLYldl9WQ
What is the difference between Corporate and Personal Insolvency?
When you realise you are potentially in a position where you or your company is insolvent you will need to take action as soon as possible. It is sadly not uncommon for corporate and personal insolvency to be bedfellows, but they are different so you will need to make sure you are approaching it from the right perspective. One of the very early discussions we often need to have with our clients is the difference between their personal and corporate financial responsibilities. Kym Carvell explains how to answer the question ‘what is personal insolvency’ and the difference between that and corporate insolvency in this video. She also discusses some of the confusion surrounding the liability status of sole traders and the common reasons why some companies can become insolvent.
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.
Personal Insolvency Rates – Women Overtake Men
Every quarter the Insolvency Service produce statistics which confirm how many businesses fail, broken down by insolvency type:, liquidations (whether they are compulsory or voluntary) administration or company voluntary arrangements (CVAs).
At the same time similar statistics are released for individuals, divided into bankruptcies, debt relief orders or individual voluntary arrangements (IVAs). There are very few details about the number of debt management plans.
When these are released, the details will always make that day’s news and as is normal with the media they focus on the worst points.
In general terms, corporate insolvency appointments have been failing from their recent highs reached during the financial crash in 2007/08 (although failures were much higher in the early 1990’s). Personal insolvency appointments have also been falling, although in the last year there has seen a steady rise. Historically men have always had higher rates of insolvency than women but since 2014, women have overtaken men.
Once a year the Insolvency Service produce more detailed personal insolvency statistics. The main headlines are:
- The total insolvency rate increased for the first time since 2009, and increased in all regions of England and Wales between 2015 and 2016.
- The North East continued to have the highest insolvency rates, while London had the lowest.
- Nine out of ten local authorities with the lowest insolvency rates were in London or the South East, whilst seven out of the ten areas with the highest rates were located in coastal areas.
- Insolvency rates increased for all age groups except 55 and over, with those aged between 18-44 showed the biggest rises.
When I review these figures I am always interested in the details. For example Corby has been in the top 10 of the worst local authority areas in terms of personal insolvency rates. As mentioned above the majority are seaside towns which have their own issues due to the seasonal economies in which they operate. Being based in Northampton we are aware that Corby still has elements of poor families struggling to make ends meet in low paid jobs. In our experience these will often be cases in which credits cards and loans have been built up, possibly in a period when there has been a loss of income or ill health or just simple overspending. Commonly once the debt has been built up they find it almost impossible to repay the debt because of the low income and so a downward spiral begins.
So what can the individual do?
The first thing required is to be honest with yourself and the situation. Sit down and summarise who you owe money to and how much. Next produce a budget detailing your income and necessary spending. Hopefully this should leave a surplus and you can then plan how to reduce your debt using this surplus.
You may find you need additional help and PBC have always offered help to individuals and will outline all the options open to them from refinancing, a debt management plan, IVA’s and bankruptcy, alone with many others. Our advice is simple: take action as soon as possible rather than leaving it too late.
Initial meeting are free of charge and confidential. We hope to understand your position, answer your questions and lay out the options available to you in order for you to consider which is the best way forward for you.
UPDATED TOTAL- Charity Walk Completed!
Kym and Jamie completed their 80 mile charity walk for Ronald McDonald Houses earlier this month. They have currently raised £2,047 and have therefore exceeded their amended target of £2,000, which itself was double their original goal.
Kym’s daily blogs, reproduced below, provide the highlights of their four days walking:
Day 1 blog: I’ve seen Wembley Stadium, Regents Park, Grenfell Tower (so sad), nesting moorhens with chicks and swans with cygnets, a green woodpecker, some handsome dogs (shame about some of the owners) and a lorry driver about 3ft away mount the pavement and take out a bollard (male naturally)! I’ve learned that London cyclists are rude and my efforts to teach them manners whilst amusing for me, were largely wasted, Jamie can’t multi task and his attempts to look at his glasses while holding a drink meant that I would end up wearing it! I’ve learned that Billie-Marie is back in Alder Hey which has made us more determined and that there are a lot of generous people out there, thank you so much to everyone who has donated. Day 1 done we’re on our way home tired and dirty. Day 2 starts at 7am tomorrow as we had to cut today a little shorter than planned because Jamie somehow has managed to lock his lovely wife Naomi out of their home!
Day 2 blog: Tough today as the heat made it hard! Today we’ve seen 3 herons, a red kite and a couple of guys appearing to be picking nits from each other’s hair! It was a more picturesque walk today along the canal path, a lot less pavement pounding. Well-mannered cyclists, friendly people except one rude guy at Watford where we also saw the days first builders bum and thankfully the only one! Is that really necessary? Must be quite uncomfortable and draughty! Jamie is suffering nasty blisters today and I have put the blister pack “in a safe place” but can’t remember where! Sorry J! Our other silly moment was forgetting to pay for parking in Northampton! Oops! Half way through now time wise though a few more miles to cover the next 2 days so early start tomorrow for day 3! We can do this!!
Day 3 blog: Off to an early start today at Tring. As my back and shoulders are surprisingly sorer than anything else I’ve decided to ditch the back pack, use a bum bag and let Jamie carry the weight! Not sure this look will catch on again so may try to up the game tomorrow and rock in socks and sandals as well! The new waist attire has taken a soaking with Jamie’s 2nd throw of a drink over me as has my phone! Today I’ve seen the most beautiful countryside and my senses have been assaulted by the less pleasant aromas that come with it! I’ve seen horses running together, a couple of boat cats, stunning wildlife and a doberman belly flop into the canal to chase geese which naturally flew away leaving the dog unable to get back out again! Help was at hand and all ended well but it was funny. Everyone we’ve met has been lovely despite Jamie’s groans of pain about his blisters! In fairness they are really bad poor lad. My legs are feeling it now but we’re almost there and I’m determined to finish even if I do so on my hands and knees.
Day 4 blog: Off to an early start again and just finished! Woohoo 80 miles over 4 days completed with lots of laughs and groans of pain along the way. Today I managed to spill my own drink on me, thought I’d give Jamie a break from doing it! We’ve had donations from strangers including the owners of Zack the greyhound who took a liking to me, seen beautiful views including common terns, had a close encounter with a heron and learned that the names Rosie and Jane appear on more barges than any other name. I have asked myself over the last few days why I accepted this fundraising challenge from someone almost 30 years younger than me but we’ve done it! Would I do it again, hell yes! Growing old is compulsory growing up and acting your age is optional and the latter is my choice and the way I plan to continue. Most importantly, we’ve almost hit our target for Ronald McDonald House which is an amazing charity that gives so much help to families of sick children, more than I can begin to explain. Heartfelt thanks to everyone who has donated and to you all for your support and encouragement, much appreciated.
To donate, please click here.