Spiralling debts cause business failures

This case study reflects the harsh reality of how a failing business(s) can have a negative impact on personal and financial wellbeing.

This is a real-life example of how not knowing what type of business it is that you are running coupled with not knowing who owns the debt – You or your business.

The great news is, we were able to help these directors back onto the road or recovery and success, but it didn’t come without sacrifice and ownership.

For the purpose of protecting our client, we will call our clients in this case study, Daniel & Heather.

The first negative blow

Daniel & Heather entered into a partnership business running a business, one that run smoothly for a short period of time.

As cash flow became tighter the use of credit became a part of everyday business activity, as creditor repayments started to kick in, profit margins started to drop. 

As profit margins started to drop and expenses increase, HMRC repayments started being made late. Making late payments started becoming a common theme until they started being missed, you see where this is going?

Now, the business is a partnership meaning it is a sole trader business between two individuals and not a limited company.

The consequences

When the business failed, the debts due and personally belonged to the joint partners of the business.

The partners become liable for a debt balance of approximately £44,000.00.

Moving onwards and upwards

The partners then started several limited companies up in a struggling industry that resulted in the closure of the companies.

The directors did voluntary liquidate the failing businesses, resulting in the debts belonging to the business being written off. 

The directors did carry some personal guaranteed debts into a personal solution, dealing with all personal debts in one.

The final outcome

Both clients entered into a formal solution for their personal debt, supporting them with repaying back 1 payment that is affordable for a fixed period of time. The directors will write a large portion of this debt off.

The directors opted to voluntary liquidate all of their failing businesses… 

Writing off an estimated debt balance, across all businesses £150,000.00

Both directors have come away from the businesses having learnt many lessons and are now on the road to success.

With the help and advice from Company Money Worries, both directors made a fresh start and has never looked back.

Are you struggling with increasing business debt and don’t know where to turn? Our team are here to help. Get in touch today or check if you qualify for free no fees company debt advice.

Please note, the case study is real however the names of the clients has been changed to protect their privacy.  

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