what would happen if we went bankrupt instead??

[sammarchant]

Do IVA's cover debts to family members? We owe over £100,000 but £70k of this was lent by my father in law to help us purchase a business 4 years ago, the other £30k has accrued trying to keep the business afloat (but is all personal loans and credit cards)THe only thing that stops me throwing in the towel is thinking that my father in law will get no money back. we've tried selling the business but no takers yet. Can you offer any advice please. what would happen if we went bankrupt instead??

[MelanieGiles]

Hi Sammarchant

Absolutely - and they can be useful votes at creditors meetings - but if you get rejections from other creditors there is a second stage of voting where relatives votes are left out but only a 50% majority is then required to accept. Do make sure that your father-in-law's debt can be properly substantiated, as obviously this will be under some scrutiny to ensure it is genuine.

There is no difference in bankruptcy - your father would stand side by side with the rest of the creditors.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[sammarchant]

Thanks Melanie
My father in laws debt can be proved, its all in the accounts of the business. I think I need to take some time to think it over. we currently maintain payments to everyone but its a real struggle. My husband had to find a job as the business didnt make enough to pay us a wage - but his wages just prop up our failing business. I think Pride is the only thing standing in my way at the moment.
I found this forum last night and its really helpful to read other peoples stories and realise Im not the only one.
thanks
Sam

[iva experts]

Hi Sammarchant and Welcome to the Forum!

I agree with Melanie Giles that you can definitely include the debt to your father-in-law in your IVA.

However you should be made aware that even though your father-in-law would be included in the IVA this does not guarantee that he would get a dividend from your IVA like your creditors would.

There is a chance that he might receive a dividend but even so the total amount paid back would not be the full 30K that he lent you.

Another option would be to leave him out of the IVA. This way after your IVA is completed (usually after 5 years) you can then use your disposable income (monthly amount offered to your creditors) to pay back your father-in-law.

The only downside in that option is that your father-in-law would not be paid back till after the 5 year period of your IVA.

All the best.


Hope this information is of use

Regards. IVA Experts

[jamesfalla]

Hi Sammarchant

Do you and your husband own a property? If you do then you need to think very carefully about bankruptcy because you may loose it going down this route.

If you are not a home owner (or you have little or no equity in your home) then bankruptcy might be a very sensible option for you. You would be discharged from the bankruptcy after 12 months which will cancel out all your commercial creditors. You could then devise a plan for starting to repay your father-in-law if you wish.

I know it is a hard decision, but perhaps you should consider ditching the business once and for all and starting afresh

James Falla

Expert in IVA, Bankruptcy and informal Debt Management solutions, with extensive experience of solving personal debt problems over the past 10 years. I am regularly featured on BBC News, Finance Programs and Radio.

Visit my blog at: http://jamesfalla.blogs.iva.co.uk

[sammarchant]

Thank you James.
we dont own a property. we own a lease on the business premises (we live above) but that isnt really worth anything as the business has made a loss every year since we have been here. we really couldnt have tried any harder to make the business a success, we put all of our savings into it and then just gradually got deeper in debt thinking next month will be better.
I really think bankruptcy is probably the only way out for us but have struggled to find any useful info on the internet, all the bankruptcy sites seem to tell you to try an IVA instead. Are all the debts completely written off in bankruptcy? My husband earns a wage, but if we leave the business we would have to rent which would then not leave much after paying all the utilities and food shop etc. I would need to find work but then we would have childcare fees. I feel so helpless and really dont know which way to turn for the best.

[MelanieGiles]

Don't forget that in bankruptcy all debts are written off, therefore the ability to repay your father-in-law does not come into the equation.

Yes I know that in practice you probably will repay the debt outside of bankruptcy proceedings - but I have to give best advice.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[razamataz_]

Hi Sammarchant[?]
Have you considered looking into Factoring for the business?
I wonder what type of business you have as you might consider trying to approach other Nationals for resale.I don't know if Foreclosure applies for businesses as well as properties but you might look into it, nothing to lose by it,tho' you may have done so of course already[:)]
best of luck
razamataz_

Thank you James.
we dont own a property. we own a lease on the business premises (we live above) but that isnt really worth anything as the business has made a loss every year since we have been here. we really couldnt have tried any harder to make the business a success, we put all of our savings into it and then just gradually got deeper in debt thinking next month will be better.
I really think bankruptcy is probably the only way out for us but have struggled to find any useful info on the internet, all the bankruptcy sites seem to tell you to try an IVA instead. Are all the debts completely written off in bankruptcy? My husband earns a wage, but if we leave the business we would have to rent which would then not leave much after paying all the utilities and food shop etc. I would need to find work but then we would have childcare fees. I feel so helpless and really dont know which way to turn for the best.

[sammarchant]

Factoring wouldnt apply to us as we run a pub/restaurant so we dont have to raise any invoices. I havent taken a wage from the pub for about a year, and we sold our previous home and put our life savings into buying the pub of our dreams(with the help of the loan of 60k from father in law) it makes a bit of money in the summer but we struggle through the winter. we are at the limit on all our cards and loans and summer is coming so there is a bit of light at the end of the tunnel, but I dont want to be in this boat again next winter, in fact I think the longer we stay, the worse mess we will be in. I am just scared of having nothing left. I know that is ridiculous. The pub has been on the market for 8 months but no offers. I think I am going to reduce the asking price to just pay of VAT and Income Tax and hopefully a big chunk off the 60k to father in law but then not sure whether IVA or Bankruptcy is going to be my best option... I wish someone could just wave a magic wand!!
thanks for listening.

[razamataz_]

I just wondered if the BBC site might offer something, or STAR NOW as this tells about forthcoming TV programmes - you might wonder where i'm coming from but there have been programmes about failing busineses and it's often about how you Market & Advertise- maybe you could get some good advice there.
i wondered what sort of location it's in and potential customer types, and what entertainment you might have had on? Have you considered Irish Country Singers as this can make a boost to atmosphere. All businesses need a USP don't they[:)] Interested in your reply-perhaps one of the Experts on here may know of someone who could help revive a flagging business.
razamataz_[;^)]

Factoring wouldnt apply to us as we run a pub/restaurant so we dont have to raise any invoices. I havent taken a wage from the pub for about a year, and we sold our previous home and put our life savings into buying the pub of our dreams(with the help of the loan of 60k from father in law) it makes a bit of money in the summer but we struggle through the winter. we are at the limit on all our cards and loans and summer is coming so there is a bit of light at the end of the tunnel, but I dont want to be in this boat again next winter, in fact I think the longer we stay, the worse mess we will be in. I am just scared of having nothing left. I know that is ridiculous. The pub has been on the market for 8 months but no offers. I think I am going to reduce the asking price to just pay of VAT and Income Tax and hopefully a big chunk off the 60k to father in law but then not sure whether IVA or Bankruptcy is going to be my best option... I wish someone could just wave a magic wand!!
thanks for listening.

[razamataz_]

[88] Hi Sammarchment,
Just been tapping into Google ' what makes a pub/restaurant business successful all year' and came up with one or two things i hope could be of some assistance to you-hope you don't mind-here goes- [:x)] Businesslink.gov.uk Practical Advice for Businesses
Barkeeper.ie/profits
Fabjob.com good business stuff[88]

What have you tried to do to save the business?

Factoring wouldnt apply to us as we run a pub/restaurant so we dont have to raise any invoices. I havent taken a wage from the pub for about a year, and we sold our previous home and put our life savings into buying the pub of our dreams(with the help of the loan of 60k from father in law) it makes a bit of money in the summer but we struggle through the winter. we are at the limit on all our cards and loans and summer is coming so there is a bit of light at the end of the tunnel, but I dont want to be in this boat again next winter, in fact I think the longer we stay, the worse mess we will be in. I am just scared of having nothing left. I know that is ridiculous. The pub has been on the market for 8 months but no offers. I think I am going to reduce the asking price to just pay of VAT and Income Tax and hopefully a big chunk off the 60k to father in law but then not sure whether IVA or Bankruptcy is going to be my best option... I wish someone could just wave a magic wand!!
thanks for listening.

[razamataz_]

Hi sammarchment,
sorry to bother you again but i wondered if you had considered something like armstrongwatson.co.uk chartered accountants that do business turnaround they have a freephone number for advice on their site.[:)]
all the best
raza

Factoring wouldnt apply to us as we run a pub/restaurant so we dont have to raise any invoices. I havent taken a wage from the pub for about a year, and we sold our previous home and put our life savings into buying the pub of our dreams(with the help of the loan of 60k from father in law) it makes a bit of money in the summer but we struggle through the winter. we are at the limit on all our cards and loans and summer is coming so there is a bit of light at the end of the tunnel, but I dont want to be in this boat again next winter, in fact I think the longer we stay, the worse mess we will be in. I am just scared of having nothing left. I know that is ridiculous. The pub has been on the market for 8 months but no offers. I think I am going to reduce the asking price to just pay of VAT and Income Tax and hopefully a big chunk off the 60k to father in law but then not sure whether IVA or Bankruptcy is going to be my best option... I wish someone could just wave a magic wand!!
thanks for listening.

[DebtDummy]

Hello sammarchant, I am not a business owner, but I am creative.[:)]
1.If near a university try a 2 for 1 night to bring in the crowds.
2.Try karioki night, that works around here.
3.If you serve food ( I believe you said you did) try 2 for 1 meals, that will get people in to drink as well.
4. If your pub is rather isolated try christmas parties, birthday parties and anything else we celebrate. Take bookings.
5. Do a Sunday Roast Dinner Special. No menu choices allowed just the same meal for everybody.
6. Try holding salsa lessons and country-line dance lessons.
7. Quiz nite is another idea.
8. Set-up your own website. Use the FREE ones. Put a lovely picture of the pub on it.

Seek professional advice and I wish you the best of luck.




All I have left is my humour.

[razamataz_]

[88] Good one debtdummy[:)] For Sammarchment[(#)]

I had to do a funeral last Nov with help cos of huge distance, and there was a kind Irish Club owner who offered, due to knowing my late old Uncle 4 some years to put on a buffet after and he had gotten in several Country Irish singers that my Uncle had loved to hear and also paid for a Scottish Bagpipes player- there was method in his madness as the drinks were flowing for 11 hrs at the club, and he had a separate room that had dance floor and yes he let it out to Salsa dance classes. It was the best funeral and wake i ever encountered and the guy had a hotel in Ireland run on similar themes, run by his daughter.He even managed to find a couple ladies who did the Riverdance style dancing. There were more than a hundred people, mostly Irish but what lovely cheery folks they were, made you feel so happy.[:)]
raza

Hello sammarchant, I am not a business owner, but I am creative.[:)]
1.If near a university try a 2 for 1 night to bring in the crowds.
2.Try karioki night, that works around here.
3.If you serve food ( I believe you said you did) try 2 for 1 meals, that will get people in to drink as well.
4. If your pub is rather isolated try christmas parties, birthday parties and anything else we celebrate. Take bookings.
5. Do a Sunday Roast Dinner Special. No menu choices allowed just the same meal for everybody.
6. Try holding salsa lessons and country-line dance lessons.
7. Quiz nite is another idea.
8. Set-up your own website. Use the FREE ones. Put a lovely picture of the pub on it.

Seek professional advice and I wish you the best of luck.




All I have left is my humour.

[sammarchant]

Hi Guys
Thank you for taking such an interest and taking the time to post your ideas on ways to help me improve business. I feel so negative most of the time these days and your positive attitude has rubbed off on me so thank you.
Believe me, I have either considered or tried most of the ideas you have come up with. We are a rural pub with a 40 seater restaurant and very small bar area, we have no function room so entertainment is not really a possibility. We have looked into it and the cost of providing even a single entertainer is about £200 for a couple of hours. I would have to sell at least 500 pints of beer to make enough profit to pay the entertainer (without taking into account wages and other overheads) and I cant physically fit more than about 60/70 people in the pub. We already do a lot of food, infact we are one of the busiest food pubs in our area and have won awards. Our restaurant is fully booked most weekends, and in summer our beer garden is packed full of diners. Already do quiz night, already have a website, not near a university, already good food trade....
Our problems are due to the high overheads of the business. We are owned by a brewery and tied to them for the supply of our beer which means we cannot benefit from any discounts that freehouses can receive. so straight away, our profit margins are affected. we cannot charge more than the freehouse pub down the road or our customers will just go there. (we make about 40% profit on beer while the freehouses make about 65%)Also our rent is 20% of turnover which the brewery will not reduce. (the trade average for a tied lease is about 12 - 15%) the only reason our business is failing is because of their greed.
The pub market is not what it used to be. People can drink so cheaply at home now that they tend not to socialise as much as they used to. Also the smoking ban comes in next year and that will have a negative impact on trade. I could cope with not taking a wage as at least the business keeps a roof over our head, but we cant keep on borrowing to support the business.
I dont want to throw in the towel. I have 12 employees who depend on me, but surely my first responsibility has to be my husband and children.
I will definitely check out some of those websites you recommended on my day off on Monday and let you know if I find any good ideas.
Thanks again for taking the time to try and help.
Sam