When you consider that sectors such as the financial industry literally dictate the direction of the UK economy, they have taken the vast
majority of UK government investment because ultimately there is a need for liquidity in the short, medium and longer term. However, even
though the manufacturing industry has shown some signs of recovery and the property market is giving mixed signals, today we saw a report on
UK holiday resorts which shows that unemployment has doubled over the last 12 months.

The truth is there are many different local economies, local business sectors and regional businesses which were impacted at different times
and to different degrees when the economy fell. There is no way that all local economies, local businesses and local property markets will
recover in tandem so while we will likely see a recovery in the south of England in due course, it could take months or years to travel north
up to the Highlands and Islands of Scotland.
The UK economy certainly is a very complicated beast!

For most people Bankruptcy really should be seen as a last resort, but if youre unable to take advantage of any of the other debt solutions available or if they simply do not suit your circumstances it may be the best way out.

The Enterprise Act 2002 came into force on 15th September 2003. It made various changes that reduced the effects of Bankruptcy, including:

• Reduce the number of restrictions that are automatically imposed on undischarged bankrupts and provide for the automatic discharge of nearly all bankrupts after a maximum of 12 months.

• Introduce Bankruptcy Restrictions Orders (BROs) to protect the public and the commercial community from bankrupts whose conduct before and during bankruptcy has been found to be culpable.

• Introduce Income Payments Agreements (IPA) as an administrative alternative to court-based Income Payments Orders (IPO). IPAs will carry the same conditions as IPOs and both will be able to run for a period of up to three years.

• Enable the Official Receiver (OR) to act as nominee and supervisor of new fast-track IVAs begun after bankruptcy order has been made.

• Require the Official Receiver to investigate why a bankrupt failed only where he thinks that this is necessary.

• Limit to three years the period in which a trustee may deal with a bankrupts interest in the sole or principal home of the bankrupt, the bankrupts spouse or a former spouse before that interest revert to the bankrupt.

For many people, bankruptcy is a way of drawing a line in the sand with regards to their debts & although it is never to be seen as an easy way out or an ideal solution, it can serve a purpose in certain circumstances if (and only if) all of the other debt solutions, e.g. IVAs are unsuitable.

If you think that Bankruptcy is your only option, phone me now on 0800 533 5370 & speak to somebody who has just been through it

There are 3 types of liquidation

(i) Members Voluntary Liquidation

A Members Voluntary Liquidation MVL is a voluntary procedure to wind up the affairs of a solvent company.

Solvent, what does this mean?A company is capable of paying its liabilities in full plus statutory interest plus the costs involved in winding up, within 12 months.

When is the MVL procedure appropriate?When a solvent company has come to the end of its useful life and needs to be wound up. For example:-

• Shareholders want to retire and have a property within the company which they want to transfer into their personal names. i.e. a distribution in specie.
• Rationalisation of a group of companies involving transfer of assets, write off of inter-company loans and winding-up of subsidiaries.

(ii) Creditors Voluntary liquidation

Creditors Voluntary Liquidation CVL is the process where the directors of an insolvent company can voluntarily take steps to wind up the company. The directors call meetings of the companys shareholders and creditors to consider resolutions to wind up the company and to appoint a liquidator.

WHEN IS A CVL USEFUL?

When a company is insolvent and no longer has a viable business worth saving. For example:

A company which has insufficient sales to cover its overheads and cannot continue to trade.

Insolvent, what does this mean?

S123 IA86 sets out the definition of insolvency which includes:- Creditor(s) are owed more than 750 and have either served a 21 day demand which has not been met or judgment has been given or it is proved to the satisfaction of the Court that the company cannot pay its debts as they fall due, or the companys liabilities exceed its assets including contingent liabilities.

(iii) Compulsory liquidation

Compulsory Liquidation, usually referred to as Winding-Up, is the process to wind up an insolvent company through the courts.

Insolvent, what does this mean?

S123 IA 1986 sets out the definition of Insolvency:- Creditor(s) are owed more than 750 and have either served a 21 day demand which has not been met or judgment has been given or it is proved to the satisfaction of the Court that the company cannot pay its debts as they fall due or the companys liabilities exceed its assets including contingent liabilities.

WHEN CAN A COMPULSORY LIQUIDATION OCCUR?

Compulsory Liquidation Winding-up is a court procedure usually initiated by a creditor of the company when all other debt collection procedures have failed. When a company is insolvent and fails to pay its debts, creditors can take steps to wind up the company by issuing a petition to Court. The procedure can also be used by the directors and shareholders of an insolvent company. There are other parties who can petition including the Secretary of State, the Official Receiver and a Supervisor of a Company Voluntary Arrangement.

If you feel that liquidation is the most appropriate debt solution for your Company, pick up the phone and call me now on 0800 533 5370