A Statutory Demand requires you to settle the outstanding debt by either:-

Pay monthly/weekly payments
A lump sum
Secure it against a property or other assets.
Within 18 days is receiving a Statuary Demand, you may apply to your local County Court to set it aside under the following circumstances:

The amount of money owed is in dispute
The debt is not payable now.
You are prepared to secure the debt to the creditors satisfaction under the creditors stated terms.
The amount owed is less than £750.
The statutory demand has been issued in error or does not comply with rules.
You can and are about to repay the debt.
You have a counterclaim of more than the money owed.
Ignoring or Failing to comply with a Statutory Demand entitles the creditor to present a petition for bankruptcy 21 days from the date of issue.

Some companies use statutory demands as a scare tactic. They know that when someone is unable to repay a debt, they generally have more than one debt, and that whoever shouts loudest tends to get paid first. However, you should always take a Statutory Demand seriously.

If you have received a Statutory Demand, or have been threatened with one, then please call us for advice. You will have more options to repay your creditors than stated in terms of the demand.

Types of Statutory Demand
There are 3 types:-

Demand for a presently due debt, but not currently subject to a court order.
Demand for a presently due debt, which is subject to a court order.
Demand for a debt which is due some time in the future.

A Statutory Demand can only made for an unsecured debt. If the creditor holds some security on the debt, than that value must be stated so the unsecured portion of the debt is known.

For debts due in the future, the creditor must give reasons as to why it is considered that you have no realistic chance of making payments when they fall due.

The demand is normally issued to you in person by the creditor. It may be posted provided there is proof that you are aware of the demand.

If you are not contactable, them the demand can be issue by advertisement, however the creditor requires a court order to allow this.

Failure to comply with a statutory demand is seen as proof you are not able to repay the debt, and as such, the creditor is entitled to serve a bankruptcy petition to the court.

What to Do Next
If you have received a Statutory Demand, or have been threatened with one, then please Call Us for FREE advice. 0871 234 4253

We can offer a solution that will be affordable to you and acceptable to your creditors

Bankruptcy Petition
How does someone become bankrupt? Under UK Bankruptcy law, there are 3 ways.

The 3 routes to Bankruptcy.

Creditor application to the court (Creditor Petition).
Debtor application to the court, i.e. applying for your own bankruptcy (Debtor Petition).
IVA Supervisor application to the court in the case where the debtor has defaulted on the IVA and alternative arrangement can't be agreed.

Debtor's Petition.

Debtor Bankruptcy Petition form (6.27)

Statement of Affairs form (6.28)

Statement of Affairs Guidance
Petitioning one's own bankruptcy requires the debtor to complete a bankruptcy petition form (called form 6.27) and a statement of affairs form (called form 6.28).

Advice on Completing Statement of Affairs form.
The Statement of Affairs form requires detailed information; including valuation of assets which may not be know without seeking professional help. Information here is in addition the Official Statement of Affairs Guidance Leaflet as provided by the Insolvency Service.

Q1.14 does not required details of informal negotiation attempts with creditors.

Q1.15 requires details of impeding court action, including magistrate courts.

Section is only relevant to those self employed at some point in the past 2 years.

Section 3 is about value of assets. Approximate values only should be given, based on sale at auction, not what they we cost to replace from new.

Section 5 asks for details of past and present bank accounts. Any money in these accounts should be withdrawn prior to the bankruptcy application. These accounts will be frozen and provisions need to be made to allow for payment essential living expenses.

Section 6 is about employment and income. Include only regular income and that of other household members as this impacts how much is needed to maintain basic domestic needs. Include all state benefits entering the household, even though the claimant is not the person petitioning for bankruptcy.

Section 7 includes a standard list of household and personal outgoings. Details of all outgoings should be detailed in addition to the standard list.

Section 8 concerns property. Those applying for bankruptcy should be aware that in the case of owner-occupation, where the property is solely in spouse's name, then the applicant may have a claim on part of the property, therefore this will be considered as an asset in the bankruptcy. Specific professional advice should be sort on this matter.

Section 9 concerns property sold in the past 5 years. If it is considered that the asset was disposed of a less than its true value, the Trustee has the option to reverse the transaction.

Section 10 covers details of dependant children, spouse/partner and other household members. This is to be taken into account by the Trustee when deciding value of income payment orders (payments from income the bankrupt is required to pay until discharge from bankruptcy.

Section 11 covers reasons for bankruptcy. Details of when difficulties when first experience and the root cause the problems are required. Extreme care must to take in completing this section as instrumentation of the facts may leads to a Bankruptcy Restriction Order.

Application for court fee exception (ex160)
For residents of England and Wales, both forms are to be completed and presented to the most local court with bankruptcy jurisdiction. For those not living or domiciled in England or Wales, the forms are to be presented to the High Court in London.

Court fees of £150 and a deposit of £325 must be paid by the debtor at this point. Court fees can be waived when the debtor in on benefits and total income does not exceed £15,050 per year. Also, the fee can be waived if undue financial hardship can be proven. Fee wavier is by application via form ex160.

Depending on local practices a hearing may be immediate, later same day or by appointment at a later date.

The Court may refer the case to an Insolvency Practioner in the case where the possibility of an IVA being is more appropriate course of action needs consideration.

Creditor's Petition.
For a bankruptcy petition to be presented to the court, 3 conditions must be satisfied.

The debtor must be domiciled or resident in England/Wales or be active in business in England or Wales, on the date of the petition, or at any time in the previous 3 years.

The debt must be at least £750 to the creditor petitioning for bankruptcy.

The debtor must have not realistic ability to repay the debt, or refusing to pay the debt. This is proven by the debt being served with a statutory demand, which has not been set aside or complied to. The 4 types of Creditor Petition.

Failure to comply with a statutory demand, debts payment currently due/overdue.

Failure to comply with a statutory demand, debts payment due in the future.

A court order execution returns unsatisfied. (Eg bailiffs were not able to seize items of value)

Default in connection with an IVA.

2 or more creditors may jointly petition.

Secured creditors may petition for the part of the debt this is not secured, or risk forfeiting their security.

The creditor's petition must state:

The amount owed, and if interest is owed how it has been calculated and the justification for this.

That the debt is for a liquidated sum payable now or at a specified future date and that the debtors has no realistic chance of making payment on time.

That the debt is unsecured.

If the petition is based upon a Statutory demand, then only that debt, plus interest accrued since the date of the demand was issued can be included.

If the petition is based upon an unsatisfied execution of a previous court order, then full details must be given including the value of any sum raised by the Court's sheriffs or Bailiffs. It is not enough the bailiffs visited the property and were unable to gain access; they would have to have been refused access.

IVA Supervisors' Petition.
If you are currently within an IVA, your supervisor may petition the for your bankruptcy on the grounds that:

You supplied false of misleading information on which the arrangement is based.

You have failed to maintain the terms to the arrangement.

In this case, the IVA Supervisors can become the Trustee in the bankruptcy.

Issue of the Bankruptcy Petition
A Bankruptcy Petition must be served in person. A Bankruptcy order may still be prevented but you must give at least 7 days notice of your intention to oppose it. You may not use any reason for which a ruling has already been made against, unless there has been a change in circumstances.

What to Do Next
If you are consider petitioning for you own bankruptcy, the you must also consider whether a IVA is a better alternative for your circumstances. This is especially the case if you own your home or have other high value assets to want to keep.

CALL US or submit the INSTANT ADVICE form for Immediate Free Advice. 0871 234 4253

Bankruptcy Hearing
At a Bankruptcy Hearing, a district judge considers the bankruptcy petition to decide whether or not to make a bankruptcy order. Once a bankruptcy order is made, you are then officially bankrupt.

You (the debtor) and the Official Receiver attend the Bankruptcy Hearing. Creditors or their representatives can attend if they wish.

In order for the judge/court to make a bankruptcy order, it must be satisfied that the debt is proven and that either:-

The debtor can't repay the debt.

OR

In the case when payment is not yet due, that the debtor has not realistic change of being able to repay the debt when it is due. When the petition is served by a creditor, they must prove that a corresponding Statutory Demand has been brought to your (the debtor's) attention.

If you have already repaid the debt in full, then the case will be dismissed, but you may still have to pay the creditors costs. If more than £750, then pursuit of these costs could result in fresh bankruptcy proceedings.

Reasons why a Bankruptcy order may not be made.
In the court's opinion, the creditor has refused to accept reasonable payment by installment or a reasonable reduced full and final payment to settle the debt.

You have reduced the debt to under £750 in between date of petition and date of hearing.

An agreement is reached at the hearing for the repayment of the debt. When the bankruptcy order is made, here are normally 3 elements.

A bankruptcy period of 12 to 36 months.
Lump sums to be raised by the sale of assets (for example home, car).
See Your Assets & Bankruptcy for details.
Monthly Contributions from income.
See Payment from income during Bankruptcy for details.

CVA's - Company Voluntary Arrangements
A CVA is similar to an IVA, but for companies rather than individuals. It is a legal procedure that enables a company to make a binding agreement with its creditors and shareholders, describing how the company's debts and credit liabilities are to be managed, while allowing the company to trade.

From the creditors' point of view, the CVA serves to achieve one of the following:-

An immediate full and final settlement of somewhere less than 100p in the pound to settle outstanding debts.

An agreed delay of payment until an certain event happens.

An agreement of payments by installments.

A CVA aims to serve the best interests of the creditors and shareholders while allowing the company to continue trading, keeping the work force in employment.

A CVA can only be proposed by a company if it is insolvent. The CVA requires the approval of 75% (by value of the debt) of the voting creditors and approval of a majority of the shareholders.

If approved, the CVA binds all creditors irrespective of how (or whether) they voted and allows the directors to retain control of their company.

Components of a Successful CVA Proposal
The proposal must be reasonable and achievable. It must explain why a CVA is in the best interests of all concerned parties and why the creditors should accept the it. The proposal details all the company's assets and liabilities and how it is to deal with secured and preferential creditors and those with a direct connection to the company.

There must be a business plan to return the company to profitability, in other words, directors must accept there is a need for change. The proposal must be viable and be likely to be considered favorably by the creditors. Working capital in addition to a review of credit repayments need to be arranged.

Creditors will vote in favour of a CVA if the alternative is liquidation with little or no return to creditors.

Basic Steps of the Procedure:-
The CVA can be proposed by directors of the company or a Liquidator/Administrator.

The procedure is administered by a Licensed Insolvency Practitioner. A study of the company and its position in the marketplace in made. Directors & secured creditors debate the proposal.

After the proposals are complete, the Nominee needs to prepare a report on the proposals which includes comment on the due diligence they have undertaken to ensure that the CVA proposals are accurate, reasonable and achievable

After the Filing a CVA Proposal:-

Once filed at court, the proposal is sent to the creditors. A meeting is chaired by the advisor or an IP with all creditors (or representative of creditors) at which the creditors vote on the proposal Creditors may request modification of the proposal, which will need to be approved by vote.

A shareholders meeting is held on the same day, but after the creditor's meeting. This requires a 50% vote in favour of the CVA Proposal. Once a decision is made, the meetings close and a report is issued by the chairman within 4 days.

Once approved, all creditors are legally bound by the proposal. After approval, the company makes agreed contributions to the trust account.

CVA - Frequently Asked Questions.
How much does the company repay its creditors?
Having reviewed the financial position and the company's prospects we would sit down with the directors and calculate what the company can afford to pay into a segregated fund, typically but not always, on a monthly basis.

Will the bank, VAT and the Inland Revenue support the CVA?
In essence a CVA allows a company with historical cash flow problems to repay its liabilities, either in part or in full (including the Inland Revenue and VAT) over a period of time. Once the company's liabilities has been restructured any monies generated by the company e.g. book debts can be used as working capital rather than paying its old debts.

Generally, they will not be problems with a CVA proposal that adheres to common sense. As the bank is normally secured (as are any finance companies), it remains outside the CVA and with all pre CVA creditors showing in the segregated fund, the pressure is taken off, because you have fresh and unallocated working capital coming in to the company.

Will suppliers still supply and support the company?
It is our experience that nearly most suppliers will continue to support a company in a CVA.

Does anyone interfere with the running of the company during a CVA?
As long as the company adheres to the terms of the CVA, the company is run under the control of the directors without any outside interference. There are certain reporting requirements to a CVA Supervisor, but there are normally simple and brief.

PVA's - Partnership Voluntary Arrangements
A PVA is a formal insolvency procedure enabling a partnership to make a proposal to its creditors regarding payment of debts, or a scheme of recovery for the business interests involved.

A PVA is similar to a Company Voluntary Arrangement in that it is a formal arrangement with the partnership's creditors for an agreed duration and under terms agreed with creditors.

Should a partnership find itself in a position where it is insolvent or experiencing severe cash flow problems, but has a viable business which will generate profits by trading on, there are a number of options available to the partners and/or the creditors under the provisions of the Insolvency Act 1986 and the IPO, such as the formal winding-up of the partnership as an unregistered company (possibly in conjunction with the bankruptcy of one or more of the partners), a partnership administration order (which is similar in procedure and effect to a standard administration order) or a PVA (possibly in conjunction with interlocking individual voluntary arrangement's ('IVA') of one, some or all of the partners).

In the case of a PVA, if approved by creditors, the partnership will be protected from the actions of its creditors to allow it to continue its business. The PVA may be approved by creditors on basis that it gives the partnership a certain time frame to realize an asset and/or to make contributions from future profits for a set period, with a view to achieving a recovery to creditors, which may not be available in the case of a winding-up of the partnership.

In a PVA, (unlike the procedure for IVA's) there is no protective interim order so consideration should be given to first obtaining an administration order in respect of the partnership, to obtain protection from creditors prior to implementing a PVA. This would depend upon the level of creditor pressure at the time.

Implementing a PVA
The procedure for implementing a PVA is relatively straightforward, although the proposals for the arrangement can be detailed and, depending upon the partnership's affairs, may be complex to draft. The partners of the firm must propose the PVA and, dependent upon the partnership deed, it is likely that unanimous approval is required. A qualified insolvency practitioner is appointed and acts as nominee and will assist and advise the partners in completing proposals to creditors, which will include details of the partnership's and partners' individual financial affairs. The nominee will report to the court on the proposals and a copy of the report, together with the proposals, will be sent to all creditors, giving at least fourteen days notice for a meeting for creditors to consider and vote on the proposals.

At the meeting the proposals will be approved if 75% majority in value of the creditors present in person or by proxy vote for acceptance of the PVA. It should be noted that if more than 50% in value of non-connected creditors vote for rejection of the PVA, it will fail (connected creditors would include employees of the partnership, other partners and their relatives). Once the proposal has been approved, it becomes binding on all creditors who have notice of the meeting of creditors. Secured creditors will not, however, be bound unless they give their express consent. Preferential creditors will be bound if the proposal does not affect their priority or their relative dividend entitlement. The nominee, or another person appointed in his place, will then supervise the implementation of the arrangement.

Once the arrangement is in place the partners will retain management of the partnership and the supervisor will monitor the arrangement and ensure that the terms of the proposals are adhered to. It will also be necessary for the supervisor to agree creditors' claims and to distribute funds as and when appropriate.

PVA Pros and Cons
The main benefit of the PVA is that once it has been approved by creditors, and assuming the partnership complies with the terms of the arrangement, the partnership creditors are unable to pursue the partners' individual estates for payment of any shortfall under the PVA. Other benefits of this procedure are that in the cases of larger partnerships, implementing interlocking IVA's for all of the partners may be difficult or impossible to administer.

It is also likely that, particularly in the case of professional partnerships, in view of the fact that any value for goodwill will be tied up in the partners themselves and their ability to generate fees, trading on will probably enhance realizations. In addition, by avoiding bankruptcy proceedings from the partnership creditors, in the case of professional partnerships the partners may avoid expulsion from their recognized public bodies, which could result in an inability to continue working in their profession.

The disadvantages of an PVA; are that unlike an IVA there is no interim order so the partnership may be forced to consider an administration order to obtain protection from creditors, pending the implementation of the PVA. An administration order is costly to obtain and may only be appropriate in the case of larger partnerships. A further disadvantage is that the PVA will not protect the partners from the actions of their personal creditors.

Winding up Petition
Prevent a winding up petition being successful, pay off your debts and continue trading - call Capital Advantage NOW to find out how. 0871 234 4253.

The term "winding up petition" usually refers to an application to a court to put a company into liquidation, although companies can be wound up voluntarily without the need for court intervention.

A winding up petition is a legal document that is submitted by the party or parties wishing to liquidate the company. These parties may be the directors of the company themselves, or may be a third party such as a creditor.

Why issue a Winding up Petition?
It is not acceptable for a third party to attempt to wind up a company purely to recover debt, nor is it necessarily in the creditor's interests to do so. However, if all other attempts to obtain payment of money owed have failed, a creditor may issue a winding up petition as a last resort.

What happens when a Winding up Petition is issued?
If a winding up petition is issued against you, a court hearing will already have been arranged. Winding up a company in this way is also referred to as Compulsory Liquidation.

If you have not already sought the advice of a debt counsellor or licensed insolvency practitioner, you must do so now. You will be required to appear in court and, if you wish to address the court in any way, you must have legal representation.

If the winding up petition is successful, the court will order that an administrator be appointed to conclude your company's affairs. Any creditors, including employees, HMRC and trade creditors, will be paid from the available funds, and at the end of the process, your company will be dissolved and will no longer exist.

What to do if a Winding up Petition is issued
First and foremost, if a winding up petition is issued against you, it is imperative that you seek advice at the earliest opportunity. Contact a specialist in debt solutions like Capital Advantage, who can advise the appropriate course of action.

Stopping a Winding up Petition
Sometimes it is possible to stop a winding up petition, but only if you act quickly and decisively. Seek advice as soon as possible, for the more time you have to propose an alternative to the compulsory liquidation of your company; the more likely you are to be successful in stopping the winding up petition. However, no matter how close it is to the court hearing, Capital Advantage can still help. If there is an alternative solution, such as a Company Voluntary Arrangement, we may be able to make a proposal to the court that this path be followed instead. This would allow your company to continue trading and clear its debts.

What is liquidation?
Many people ask us this question every day and it's really a straight forward answer.

Liquidation usually means, the company's trading stop and its assets are turned into cash or "liquidated". All other possible liabilities, like employment or renting a property, are stopped.

There are three types of liquidation in the UK:

Creditors Voluntary Liquidation

Compulsory Liquidation

Members Voluntary Liquidation

Creditors Voluntary Liquidation
Creditors Voluntary Liquidation is started by the directors, they tell the shareholders the company is not viable, it is insolvent and they must stop trading. The shareholders then ask a licensed insolvency practitioner to call a creditors meeting as soon as possible (not less than 14 days notice is required). At this meeting the creditors vote to appoint a liquidator.

So, this is why it's called Creditors Voluntary Liquidation. It's very common, quick and a very powerful way to close a business and deal with things properly. You can get on with a new business or job, the company is closed, leases cancelled and all the staff made redundant.

What does a liquidator do?
He or she runs the liquidation, fills out all the forms, calls all meetings and investigates the conduct of the directors before the liquidation. He collects assets and turns them into cash. He then works out the debts and pays the creditors from the assets, if there were any.

What do we do?
The directors have to fill out a detailed questionnaire for the liquidator. They MUST provide all of the books and records to the liquidator. After this there is a creditors' meeting which a director must attend. After that, very little else usually.

Don't worry; you can be a director of another company! But always act properly, don't take chances and think you are a smarter than the law. You aren't, lots of people think they are and end up in trouble. Call us now, ask all the questions you want for free.

Compulsory Liquidation
This is a different type of liquidation. It is started by a creditor who has usually not been paid for supplies or services. He or she will ask the High Court to hear a "Petition" to wind the company up. If the Court agrees and or the debt is not paid; then a "hearing" is held in front of a High Court judge who then passes an order to wind the company up compulsorily.

This is a common tool for debt collecting; all the creditor has to do is have an overdue debt over £1500 and then ask a solicitor to start the winding up process.

Facing this threat? CALL NOW!
Capital Advantage can always help. 0871 234 4253.

We can use our huge knowledge of the law to stop this process, if you have a viable company.

Most often it is the tax man that issues petitions, they simply want to get the taxes collected or stop you trading to stop the tax debt rising. Facing this threat? CALL NOW! 0871 234 4253 and stop the worry.

Members Voluntary Liquidation
This is used when a company has lots of assets but no further purpose. The company assets are liquidated and turned into cash; this is then paid to creditors and shareholders. In MVL every creditor has to get paid in full. Most often this is for rich companies with lots of assets.

Whatever problem you may face, we can help you NOW, but, only if you call us NOW 0871 234 4253.