Advice on next steps, business insolvency and imminent closure with significant PG's

[HD76]

Dear members,

This is my first post, though I have followed threads and gained great insight on this helpful platform. I hope I could ask for your thoughts on my best approach in preparing for a lot of personally guaranteed debt to be called in imminently. My products business of 9 years became insolvent this year, I've battled so hard to survive and put everything i had in to this business over the years. I've been in business for 24 years and am devastated to be in this situation. I have secured a pre-pack sale with a competitor brand, which thankfully will cover the majority of a secured charge on the business, The expected 2 week process is starting now and will be due to complete soon. They have offered me continued employment, which is some relief given I'm about to lose everything.

I have around 96k with funding circle and another 20k across other lenders where PG's will be enforced. I want to do my best to manage them and show that I accept responsibility. I just don't have access to any lump sum funds, zero savings and my partner earns an average salary. Our property does have equity, we are joint names on the policy, with around 200k in equity, So I would expect that my half is up for grabs. We have 2 children and I want to explore every avenue possible to avoid losing our family home. I think within 2 years I could get 50k together with saving and potentially working 2 jobs. Would they wait that long for a settlement offer?

Do I wait for contact first or do I make the first move in acknowledging the debt. I assume they will receive notice of our administration within days. What do you think the likelihood of funding circle agreeing to an IVA? If they reject an IVA, maybe they will accept a monthly payment plan, I'm just hopeful, despite being petrified. Failing that I am looking at potential bankruptcy, in which case would that almost definitely lead to a charge on the property.

Any thoughts would be greatly appreciated on what should be the best move forward for me.

Thank You

 

[Gyumri]

Have a read here:

https://researchbriefings.files.parliament.uk/documents/SN05178/SN05178.pdf

 

[Lisa Thomas]

Dear members,

This is my first post, though I have followed threads and gained great insight on this helpful platform. I hope I could ask for your thoughts on my best approach in preparing for a lot of personally guaranteed debt to be called in imminently. My products business of 9 years became insolvent this year, I've battled so hard to survive and put everything i had in to this business over the years. I've been in business for 24 years and am devastated to be in this situation. I have secured a pre-pack sale with a competitor brand, which thankfully will cover the majority of a secured charge on the business, The expected 2 week process is starting now and will be due to complete soon. They have offered me continued employment, which is some relief given I'm about to lose everything.

I have around 96k with funding circle and another 20k across other lenders where PG's will be enforced. I want to do my best to manage them and show that I accept responsibility. I just don't have access to any lump sum funds, zero savings and my partner earns an average salary. Our property does have equity, we are joint names on the policy, with around 200k in equity, So I would expect that my half is up for grabs. We have 2 children and I want to explore every avenue possible to avoid losing our family home. I think within 2 years I could get 50k together with saving and potentially working 2 jobs. Would they wait that long for a settlement offer?

Do I wait for contact first or do I make the first move in acknowledging the debt. I assume they will receive notice of our administration within days. What do you think the likelihood of funding circle agreeing to an IVA? If they reject an IVA, maybe they will accept a monthly payment plan, I'm just hopeful, despite being petrified. Failing that I am looking at potential bankruptcy, in which case would that almost definitely lead to a charge on the property.

Any thoughts would be greatly appreciated on what should be the best move forward for me.

Thank You

Hi

Sorry to hear about your situation.

You have suggested the company's charge should be settled in the Administration. Is it a fixed charge, or a floating charge?

If FC is your main/sole creditor then I can't see why an IVA would be relevant here, you would simply negotiate a repayment plan direct.

I know someone who specialisies in challenging the validity of charges and negotiating for Directors. DM me if you want their details.

As regards timescales, if you were to be made Bankrupt or to make yourself Bankrupt and worst case scenario the property was reposessed and sold, it would probably take about 18 months to 2 years to pay out a dividend, and this would be less the extremely high costs, so there is always room for negotiation as FC wouldn't see a full dividend back.

 

[Mark T Jones]

I'm sorry to hear of your situation.
Hopefully, to put your mind a little bit at rest, most lenders are really not keen to take people's homes (except where they a clearly living well above their needs).

From experience, FC are always keen to explore extended payment-term options (make them sensible for both sides).

My personal advice is to keep conversation flowing (but don't dive straight into any agreement), initially by ensuring that they actually have the right documents in place.

 

[Frank Wessely]

Hi @HD76

FC will consider any sensible deal that offers close to full repayment as a minimum but they are likely to require a Charge over your share of the home as security.

Thanks.

 

[Elliot Green]

I would engage with them when they are ready to contact you.

 

[Kixoponev]

First off, I'm really sorry you're going through this. It sounds incredibly tough. Given your situation, it’s good you’ve got the pre-pack sale and employment lined up. That’s a positive start.

When it comes to the debts, it might be a good idea to get ahead of it and contact the lenders yourself. Showing you’re proactive can sometimes go a long way. As for an IVA, it's worth a shot since it shows you’re trying to make things right, but be prepared for them to possibly reject it. If that happens, hopefully, they’ll accept a monthly payment plan.

If it comes to bankruptcy, yeah, it could mean a charge on the property. It might help to talk to a financial advisor or debt counselor to get some professional advice tailored to your situation. Hang in there, and good luck.

 

[HD76]

Hi

Sorry to hear about your situation.

You have suggested the company's charge should be settled in the Administration. Is it a fixed charge, or a floating charge?

If FC is your main/sole creditor then I can't see why an IVA would be relevant here, you would simply negotiate a repayment plan direct.

I know someone who specialisies in challenging the validity of charges and negotiating for Directors. DM me if you want their details.

As regards timescales, if you were to be made Bankrupt or to make yourself Bankrupt and worst case scenario the property was reposessed and sold, it would probably take about 18 months to 2 years to pay out a dividend, and this would be less the extremely high costs, so there is always room for negotiation as FC wouldn't see a full dividend back.

Thanks so much @Lisa Thomas. Your advice is helpful. I will definitely DM you regarding your contact for creditor liaison. Thanks again. Helen

 

[HD76]

I'm sorry to hear of your situation.
Hopefully, to put your mind a little bit at rest, most lenders are really not keen to take people's homes (except where they a clearly living well above their needs).

From experience, FC are always keen to explore extended payment-term options (make them sensible for both sides).

My personal advice is to keep conversation flowing (but don't dive straight into any agreement), initially by ensuring that they actually have the right documents in place.

Thanks Mark, I’m grateful for your encouraging words. I am reasonable and accept the PG’s so I’m hoping they will not be too heavy on me. Understood I’m not rushing in aswell

 

[HD76]

I would engage with them when they are ready to contact you.

Great help thank you. I’ll wait rather than contact them first.

 

[HD76]

First off, I'm really sorry you're going through this. It sounds incredibly tough. Given your situation, it’s good you’ve got the pre-pack sale and employment lined up. That’s a positive start.

When it comes to the debts, it might be a good idea to get ahead of it and contact the lenders yourself. Showing you’re proactive can sometimes go a long way. As for an IVA, it's worth a shot since it shows you’re trying to make things right, but be prepared for them to possibly reject it. If that happens, hopefully, they’ll accept a monthly payment plan.

If it comes to bankruptcy, yeah, it could mean a charge on the property. It might help to talk to a financial advisor or debt counselor to get some professional advice tailored to your situation. Hang in there, and good luck.

Such lovely supportive feedback. Yes the first company I went to snapped up the pre pack option as my business to outsiders and customers was considered with great credibility in its niche. It will be sad to see it go and for all those years of hard work benefit another company. I am however, keen to do well in the position they’ve offered, basically running my previously owned brand. Reassuring words on FC. We already downsized our property 2 years ago, when I started to feel the crunch, in order to save money and take less from the business. It would be awful to go through it again so I’ll stop fearing the worst case scenario. Thank you so much.

 

[Porky]

@HD76 Not much to add here than what's already been said other than to say, please don't stress about this, you are not on your own, its been a tough few years frankly for a lot of people in business. I can 100% confirm same regarding FC, ultimately they will accept a sensible long term repayment plan so you can stay where you are. Nobody sets out to fail, its just how it is and as i say trading conditions have been dire.

Main thing now is really try not to stress, easy for me to say as I know it will be on your mind but seriously once you have the process in hand and its getting sorted you will feel much much better, you will soon be on the other side of it and it will be yesterdays news and you will wonder what you were stressing over,

All the best to you, take care now.

 

[Lisa Thomas]

First off, I'm really sorry you're going through this. It sounds incredibly tough. Given your situation, it’s good you’ve got the pre-pack sale and employment lined up. That’s a positive start.

When it comes to the debts, it might be a good idea to get ahead of it and contact the lenders yourself. Showing you’re proactive can sometimes go a long way. As for an IVA, it's worth a shot since it shows you’re trying to make things right, but be prepared for them to possibly reject it. If that happens, hopefully, they’ll accept a monthly payment plan.

If it comes to bankruptcy, yeah, it could mean a charge on the property. It might help to talk to a financial advisor or debt counselor to get some professional advice tailored to your situation. Hang in there, and good luck.

An IVA is not necessarily worth a shot, especially given it sounds as if FC is the only material creditor here.

Bankruptcy would not mean a charge on the property. Once Bankruptcy has taken effect no-one would be able to register a charge against the property.

Please be careful with the advice you are giving out.

 

[Lisa Thomas]

Thanks so much @Lisa Thomas. Your advice is helpful. I will definitely DM you regarding your contact for creditor liaison. Thanks again. Helen

You're welcome.

 

[HD76]

@HD76 Not much to add here than what's already been said other than to say, please don't stress about this, you are not on your own, its been a tough few years frankly for a lot of people in business. I can 100% confirm same regarding FC, ultimately they will accept a sensible long term repayment plan so you can stay where you are. Nobody sets out to fail, its just how it is and as i say trading conditions have been dire.

Main thing now is really try not to stress, easy for me to say as I know it will be on your mind but seriously once you have the process in hand and its getting sorted you will feel much much better, you will soon be on the other side of it and it will be yesterdays news and you will wonder what you were stressing over,

All the best to you, take care now.

Thank you Porky. I’ll be taking baby steps to rebuild my life back again . I’ve been to a dark place building up to accepting the companies non viability. I now must be resilient. Thank you for your grounding words of advice.