Case Study - The insolvent sole trader Butcher


The butcher is involved in a small business with only 2 employees and cannot afford to pay his debts.

His shop is traditional in style and sells only fresh meat and no other products. Due to the foot and mouth crisis, his sales have dropped.

The stock that he has purchased has only a short shelf life and without a strong customer base much of this is having to be discarded. He has reached his credit limit with his major supplier and is having difficulty buying further meat.

His friend, another butcher has offered him PAYE employment in his shop, should he decide to close the business.

Having read about proposing an IVA at the section of this website dealing with personal insolvency, he has decided that if he shuts his business and accepts the offer of full-time PAYE employment he will have a regular income and be in a position to put forward an IVA proposal offering monthly payments.

The IVA proposal was agreed with his creditors and the butcher consequently avoided bankruptcy.

Alternatively the butcher could have proposed an IVA if the butcher's shop was now profitable again and in consequence saved the underlying business.

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