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Interlocking IVAs

Partnership Solutions Home
Interlocking IVAs
Partnership Liquidations
Partnership Administration Orders
Partnership Voluntary Arrangements
PVA & Individual IVAs

Operating a partnership can be stressful especially if it has debt problems. Debts can accumulate for a range of reasons; bad debts, lost contracts, or just poor financial control. The debts may be a combination of business and personal, as often personal loans and credit card debt is accrued trying to support the business.

Voluntary Arrangements can be used in a number of ways:-

Arrangements based on contributions

The most common IVA involves the individual retaining his or her business assets but instead offering to pay monthly contributions out of future earnings over a fixed period of time, usually 5 years. Where there is a personal property with equity, creditors will expect that a sum is introduced at the end of the arrangement in place of a share of the trader's equity.

Partners can propose interlocking IVA's which essentially provide for the partners to make one monthly contribution to settle all debts irrespective of whether the debts are in either partner's name or owed jointly.

Arrangements based on a full and final settlement

Generally these types of arrangements offer creditors a lump sum to settle their debts.

For example:-

Helen and Adam are publicans and have around £40,000 of debt consisting of Inland Revenue Self Assessment tax, loans and credit cards. They have a property which is rented out and will generate around £25,000 if sold. They have increased trade at the pub which is now operating profitably. Their income can now cover future trading expenses but is insufficient to cover debt repayments.

Solution

The partners can put forward full and final interlocking IVA's offering creditors a lump sum of £25,000 to settle debts of £40,000. After costs creditors would receive around 50p in the £.