A UK based self employed individual – IVA case study

The Challenge

An individual working in the advertising and publishing sector faced significant financial difficulties. The business, with a turnover of around £165,000, was struggling due to a combination of ill health and a family bereavement, which caused the individual to lose focus on the business. This led to mounting debts, particularly with HMRC, who was the sole unsecured creditor.

The Solution

The individual initially contacted RMT KSA to explore an Individual Voluntary Arrangement (IVA). In April 2015, we were appointed to assist with a proposal offering 50p back for every £1 owed, for all unsecured creditors. However, HMRC, the only creditor, rejected this offer and took a more drastic step by serving a bankruptcy petition on the individual.
A year later, and RMT KSA were re-appointed to propose a revised IVA. This new proposal included deeper insight on the causes of the financial issues and, crucially, offered a 100p in the pound dividend, meaning the individual would repay the full amount owed. A junior barrister was brought in to secure an adjournment of the bankruptcy hearing , giving HMRC time to consider the new proposal.

The Results

The revised IVA proposal was successful. HMRC accepted the new terms, and since they were the only creditor, the IVA was approved at the creditors’ meeting in June 2016. As a result, the bankruptcy petition was dismissed, and the individual was able to avoid bankruptcy while committing to repaying their debt in full. The successful negotiation allowed the individual to focus on securing new work and continue operating the business.