I was introduced to Mr T (not the one from the A Team) and Miss S by a fellow Insolvency Practitioner. They are a co-habiting couple in a property owned and paid for by Miss S, along with her 12-year-old son.

The company run by Mr T had been placed into Liquidation and the Liquidator / fellow Insolvency Practitioner (IP) had a substantial claim against him personally. In addition, the company had secured lending from a Funder, backed by a personal guarantee (PG) signed by both Mr T and Miss S. My fellow IP referred the couple to me, to advise on their personal financial position and how to deal with their individual liabilities.

Despite the debt to the funder being joint and severally due, it soon became apparent that their circumstances were very different from one another and therefore two different approaches were needed.

For Miss S, who had very few other creditors and all with small balances, the PG was the only real issue, but of course, she was the one with the asset / property, and there was a final charging order already in progress when I was first approached. 

A financial analysis was undertaken specifically focusing on income and expenditure, identifying various areas where costs could be cut in order to afford to make monthly payments to the Funder. Since this was the only creditor, the costs and necessity of proposing an Individual Voluntary Arrangement (IVA) seemed disproportionate. Once the figures were agreed with Miss S, informal negotiations were started with the Funder through their solicitor. 

The interim charging order had been served a while before my involvement, so without a strong case for defending it, solicitor’s advice was that it would cost a considerable amount in legal fees to prevent it becoming a final charging crder and there was no certainty of success. It was therefore considered that the best that could be done was to come to an arrangement with the Funder so that they would not enforce the order and seek possession. 

A proposal was prepared with a comparison between accepting a monthly payment for three years or the likely return to the Funder after bearing all the costs should the charge be enforced. It was illustrated that the monthly payments would yield a better return to the Funder, and this would also allow Miss S and her son to retain their family home. The proposal has been accepted and the agreement met that so long as payments are maintained, the funder will stop all interest and charges accruing and will not seek to enforce the final charging order they have now obtained on the house.

In the meantime, an IVA has been drafted for Mr T and the Liquidator who is the major creditor by far has now agreed to the terms proposed.  As I am sure will be appreciated, any payments received by the Funders from either the informal agreement with Miss S or the IVA of Mr T will reduce the balance of the other party.

How Shaw Gibbs can help individuals facing financial difficulties? 

Shaw Gibbs has two Insolvency Practitioners and a large, experienced team in position to help in all situations that involve or touch on insolvency or corporate recovery. We also have the back up of one of the largest accountancy and business advisory practices in the Thames Valley, with an office in London, to help advise business on a whole host of matters including; tax planning, accounts and audit, corporate finance, and financial planning. Furthermore, Shaw Gibbs' membership of the DFK international association provides further support in cross-border situations with different jurisdictions. 

Our Insolvency Practitioners always take the time to understand individual circumstances to ensure the right advice is given.