What once was a dream turns out to be nothing more than a nightmarish existence and in some cases a nightmarish coexistence with debt. Remember the first time when you had a vision of becoming the manager of your own company? Are the same feelings still alive today? Is joy and exultation still the keyword in your life or has sorrow made its nest and autumn seems to never come?
Administrating a business is one of the most hazardous activities due to the unforeseen chain of events. To give you the most recent example: Dubai, one out of the 7 states that make up the United Arab Emirates faces crisis. Past and future are having a serious debate and the end result is still covered in mist. Fact is that a boom that lasted for 6 years and turned desolate sand dunes into a fancy metropolis – building the tallest buildings and biggest shopping malls are just few of its trademarks – was brought to silence by the centuries plague : debt.
There is nothing to be ashamed of, as it can happen to each and everyone, from the greatest landlord to the smallest shopkeeper. Individuals are to feel remorse if they actually sit and wait, hoping for a miracle. Fairy tales do no longer exist; therefore grabbing the first miracle that comes in our way is the only solution one should get.
Impediments are to be excelled and this is the only thing that should motivate directors or average people in case they come across troubled waters. The most appropriate tool for such a purpose is a Business Individual Voluntary Arrangement. The first impulse of many companies is to re-structure the existing debt by restructuring the company itself. Sometimes there is really no need to apply to such a drastic measure.
Seeking advice from the same bankers who put pressure on the company might sound a terrible deed, yet it is the first step towards reducing debt and having profit just like in old times.
The Business IVA is specially designed for companies yet it shares several similarities with all the other types of IVA within the IVA family. Similarly to an Individual IVA, a Business IVA gives a chance for managers to keep the company on a floating level, by presenting a plan to the creditors and bankers and thereby hoping to keep up with trading. Anybody who has a plan sets out to achieve its objectives.
In order for this to happen, any proposal placed for consideration must be meaningful and has to prove that the company will succeed in respecting the stipulations.
What is different as compared to an Individual IVA is that the latter one is based on incomes and expenditure whereas a Business IVA goes far beyond these two criteria. All in all it has to demonstrate viability, which is totally uncommon for individuals, who just simply rely on income.
Proposals are generally subject to 75% approval by the creditors. In case an approval takes place, a supervisor will overlook the running of the company. In a contrary case – rejected approval – the proposal gets to be supplemented with an administration arrangement.
The Financial Rescue Package will be unfolded in the strictest atmosphere of confidence. It is the business of the company’s leadership and of the creditors. The whole informational package – covering past and future financial information – is within the reach of these two components.
Potential customers of a Business IVA put themselves generally the same questions. Among these, the most high rated is concerned with the continuation of the business. So here it is: Can individuals stay in business with an IVA? Usually they can, after all it is a matter of strength and determination, of course if they follow the right IVA advice.
Being extremely persuasive represents 50% agreement from the creditors. It cannot be emphasized enough that the sole key to an excellent Business IVA is persuading the creditors that the business is viable despite the existing debt. The answer to the question is a categorical yes.
Bankruptcy is the top restrictive debt management tool. Please note that within an IVA there is no restriction on your business whatsoever. In fact more and more people use an IVA in order to stay in the business and trade normally. Even so, managers have to be cautious and avoid entering further debts.
Rehearsing before coming to an end of our discussion, gathers the following minimum knowledge package on a Business IVA :
Ø Not just the management of the company but the staff as well must commit itself to pay back all of the creditors.
Ø The company must assure itself to make monthly payments.
Ø The ability to make profit is mandatory as this is yet another guarantee that you can afford an IVA.
Ø Keeping up to date with the filing of all existent post-IVA tax is once again mandatory.
Ø You have to show the trading accounts for the last 3 years to the Insolvency Practitioner.
Ø The same applies for tax returns.
Ø Directors have to provide an efficient business plan and cash flow for what is to come in the following 2-5 years.
Ø CREDITORS ACCEPT ONLY VIABLE BUSINESS PLANS.
There is no doubt that having a Business IVA or not makes the difference between still owing a company or not. We can give you all the advice of this world, as long as the feeling of need has not established itself in your mentality. When this is ticked, remember to take legal advice well before any action is taken or else be prepared to face severe repercussions.