The Business
Two Directors of an IT company were referred to us, as the Company had failed and was placed into Voluntary Liquidation.
The Challenge
The Directors had personal guarantee debts from banks, other financial institutions, and their Landlord. Their personal credit card debts had also built up, as these funds were borrowed and then injected into the business to help with cash flow difficulties. In addition, mortgage arrears were starting to accrue, statutory demand’s and judgments had started to be served.
NBR solution
A full review was carried out in relation to the Director’s financial affairs. It transpired that the salaries they were being paid in their full-time jobs were so much more than the dividends which they were taking out of the company.
This meant that they had sufficient income stream from which to live comfortably but they were unable to afford the monthly payments in relation to their personal guarantees and credit card debts. This evidently had resulted in the Company’s failure.
Their only asset was the matrimonial home which was independently valued and indicated that the average equity in the property was £32,000.
One of the Director’s sister made an offer to buy the house from both Directors. We advised the Director to obtain three professional valuations which would be needed to show a reasonable calculation of the equity in the property.
The sister released from her current Matrimonial home adequate equity to pay the £32,000 and the Directors’ were both advised to petition for their own bankruptcy.
We assisted the Directors with the Bankruptcy process and provided full details (of the transaction with the Sister) to the Official Receiver. The £32,000 was given to the Official Receiver for the benefit of Creditors. This successfully resulted in the Director keeping his home.
Next Step
If you want to find out anything further about this topic then please feel free to call me on 0330 236 9930, 0330 236 9938 or 07961 116321. All conversations will be in strict confidence. You can also email me vee@navigatebr.com
This article is for information and interest only. It is not a substitute for full professional advice, which will take in to account the specific and individual circumstances. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising as a result of any person or organisation acting or refraining from acting on any information.
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