Company Director

[jon123]

Hi,

I am a director of my own company (along with two other people) and as such most of my income comes from our company dividends. I am considering an IVA, but does anyone know what the implications are in this situation?

I would rather avoid anyone else finding out about an IVA if I did get one, but would my job mean that an IP or creditors need to get information about the company's financial position? And how would they determine my income if I don't have payslips? Has anyone been in a similar position?

Thanks.

[catullus]

Hello jon123

If the majority of your income comes from dividends then the IP will need to satisfy himself that this source of income is sustainable and predictable.

It's necessary to do this for your benefit, in order that an appropriate repayment schedule can be agreed, and also for the creditors benefit so that the IP can confirm that they have seen evidence that the source of income is real.

The IP can do this by reviewing the published accounts of the company, which you should have copies of, and perhaps other management information that may also be in your possession.
The IP will also need to see your bank statements which will confirm the timing of receipts of dividends.

Without wishing to alarm you too much, you also need to appreciate that the shares in the company are an asset of yours, just like a house or a car. If they had a market value (eg shares in BP) then potentially creditors could ask for the shares to be sold as a condition of the VA being approved.

In reality shares in private companies don't have a marketable value, so this point is probably academic, but possibly with the company having other shareholder/directors a creditor might take the view that you should offer the shares to them.

That would be very unusual but I make the point so that you'll understand the issue relating to shares.

[jpj]

As a director, your IVA may affect the companies ability to borrow money as they may credit check the directors. Im in a partnership (not ltd) and all company borrowing has had to cease until my IVA completes!