Mrs Brown had had a challenging financial year but had managed to repay all her creditors save one, and her business was thriving again. Her kitchen showroom was busy, and lots of sales orders were in the pipeline. She had been living together with her partner for about 10 years in the family home, and they had about £70,000 equity in the property, but the deeds were in Mrs Brown’s name only. She opened the mail only to find a Bankruptcy Order from the HMRC. She had been made bankrupt in her absence and she had been told to meet the Official Receiver the following week.

The creditor she didn’t pay was HMRC.

She had read that the Government’s time to pay initiative meant taxes from small businesses were not to be pursued so aggressively and they should be given time to pay. Quite simply Mrs Brown had ignored the correspondence and was waiting until the last minute to contact HMRC with a payment plan. Critically a key piece of HMRC Court correspondence had gone astray in the Postal Strike meaning she had no knowledge of the Bankruptcy Petition Court date and she was made bankrupt in her absence. Now, all of her assets including the business and home belonged to the Official Receiver.



The Solution

Equally critical in this case was Mrs Brown’s decision to contact one of our team immediately after she opened the mail. A meeting was arranged, and we met within an hour. Immediately following the meeting we contacted the Official Receivers (OR) office and after advising her of what had happened, we asked for her cooperation to try and Annul the Bankruptcy in the interests of the Creditors.

We had calculated that as the couple had lived together for ten years in the house and both had contributed towards the running of the property, half the equity belonged to the life partner. That being the case if the bankruptcy went ahead, the return to the creditors was less than 0.28p in the £1 but by putting in place an Individual Voluntary Arrangement we were prepared to offer 0.60p in the £1 over 5 years. The bankruptcy was annulled and an IVA was put in place at £1,800pm for all creditor debts (as they had all been forced to do so because of the HMRC action).

An Individual Voluntary Arrangement was put in place as an immediate solution.