Informal Full and Final

Informal Full & Final generally offers via informal arrangements demonstrate that this is a better return to the creditor

Bankruptcy can provide relief from debt if you have little in the way of possessions and surplus money that would be available to creditors in a bankruptcy. This could include:

• Personal Guarantees to creditors or banks
• Claims by a Liquidator/Administrator for overdrawn loan accounts or excessive dividends

Generally offers via informal arrangements demonstrate that this is a better return to the creditor than they would get if you were forced into a formal insolvency. Before making an offer, it is vital to make sure that the claim is valid and properly enforceable. Below is an example of how we helped two directors facing total debts in excess of £374,000 following the failure of a limited company. They were referred to us by the liquidator of the company.

Personal Guarantees and claim from landlord where directors were party to a lease

Following the failure of a company which had prior to its decline, had an annual turnover of £6.2M, James and Phillip found themselves facing personal guarantee liabilities of £163,938 which were accruing interest at a daily rate of £15.72 per day and they were also parties to a lease to a factory where there were arrears of rent of £45,949 and future rents due totalled £210,357. In addition, there was a further claim for dilapidations which had not been quantified. James and Phillip had set up a new company which was traded reasonably well but it was early days. They both had properties with equity, pension funds from which they were unable to access any cash (both were under 50) and could not afford to make monthly contributions. Bev Budsworth from The Business Debt Advisor worked with James and Phillip over numerous months to pull together an offer of settlement of £120,000 – they each had secured personal loans from family of £60,000 each. The bank accepted £70,000 to settle their total debt of £163,938 and the landlord settled at £65,000 plus a rent deposit of £5,130 in settlement of arrears and future rent which totaled £256,300.

Help with an Informal Settlement

The Business Debt Advisor has significant experience of helping individuals settle personal guarantee or personal claims following the failure of a business. A face to face meeting is recommended so we can understand the issues properly. If this is not possible we can communicate by phone or skype. In order to offer appropriate advice on all options, we will need to have a detailed understanding of how the claims arose, your personal assets and liabilities as well as your personal income and expenditure.

Other Options

If your problems extend beyond one or 2 personal problem debts and you have other business and personal debts, there are other options which may be more appropriate such as an IVA. If you are self employed there is more information at IVA at Self Employed. This site also details options for limited companies if it is apparent that your business is struggling.