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Bankruptcy Case Study In Respect Of "Protective
Steps"
Background
Roy is a bachelor living in rented accomodation.
Roy runs a printing business as a sole trader. Valuers have
placed an open market value on his machines of £15,000.
Roy has VAT, PAYE, business creditors and credit card liabilities,
together totalling £200,000. Roy realises that he has
little option other than to petition for his bankruptcy or
propose an Individual Voluntary Arrangement. Roy is worried
about how he will earn a living afterwards.
Solution
As a first step advisers engage professionals
to confirm the open market value of the machines. Let's say
the value is confirmed at a figure of £16,000.
It is quite legitimate then for Roy's
father to buy the machines for £16,000. The £16,000
is then held intact by Roy's Insolvency Practitioner adviser
(such as Purnells).
Roy then petitions for his bankruptcy.
Comment
Post bankruptcy Roy can again set up
as a sole trader printer using the machines now owned by his
father.
The effect of the bankruptcy has been
to relieve him of £200,000 of debts but his personal
situation has changed little.
Please also re-read the layman's guide
to appreciate the other effects of bankruptcy on Roy.
To re-read the laymans guide
click here.
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