If the partners believe in the fundamental viability of the business then a rescue mechanism exists that can be a powerful tool or framework for the restructuring of the business. The partners must be prepared to prove viability of the business and the partners estates must be solvent prior to the PVA being proposed.

What is a PVA? In simple terms it is as a deal between the debtor (the partnership that owes the money) and the creditors; the people or businesses to whom the money is owed. The partnership (and if the individuals are doing their own IVA's) , the individuals make payments on a regular periodic basis to a fund which eth IP will distribute at certain periods to creditors of the debtors.

Who should use a PVA? It is imperative that the PVA is only used where a partnership's business is viable or where it has disposable assets that can be turned readily into money in the short to medium term. Using the PVA can allowed time to sell such assets for better value than a liquidator. If the business isn't viable it should be wound up as soon as possible and individual bankruptcy initiated if required. The PVA Guide Debtors who run small or not so small businesses partnership can often find themselves in a position where the business is struggling financially. The partnership in trouble is usually under extreme cash flow pressure and cannot manage the problem. A business may be suffering because the partners are fire fighting and not concentrating on running the business. This can become all-consuming. This can often lead to a downward spiral towards the closure of the business and bankruptcy of the individuals. The first thing to do is to make a list of all those whom the partnership owes money. This includes everything that is due to become payable in the short term as well.

It is possible to estimate these debts because sometimes it's impossible to make detailed and exhaustively accurate lists. The law allows for an estimated statement of your debt to be used as the basis for preparing a proposal to deal with that problem. Next make a list of all of the partnership's assets and all of the individual partner's assets. Put reasonable values on them and if you cannot ascertain values for assets estimate. The law doesn't envisage you going out get professional valuations for every asset because this would be too time-consuming and costly. Perhaps the most important process to go through is to look dispassionately at the business and decide whether it is viable. Decide whether there is enough activity for your business to be profitable with its current overheads or if it were to be restructured. If however the business has never made profit, sales are not rising to the level where overheads start and known prospects aren't great then a PVA is not suitable. Once you have established the true position the business' debtors, creditors and its viability you should consider the PVA process. At this point you should call us on 0116 217 1406.

Once called we will assist you in building the proposal, collating all the necessary information and dealing with all of the aggressive and passive creditors. We will seek to discuss the position with your bank and secured lenders, the Inland Revenue and VAT Office. It is important however to remember that the proposal will be your proposal and that you have to swear an affidavit saying that is true incorrect to the best of your ability.

Writing the proposal The law envisages that the debtor(s) will write the proposal and then ask an IP to act for him or her. That is not how it works in practice. We will create your proposal for you with your input an dour expertise. It will be:
1. Based on sensible cash flows, sales and costs.
2. Created in the knowledge that trading will be difficult.
3. Be realistic in it's repayment offering. PVA Proposal contents The proposal will include a current description of why the business has failed and why it is insolvent. It will also detail what the structure of the deal is and how the creditors are going to be repaid.

To help the creditors decide whether to accept the PVA it will contain what is called a statement of affairs. The statement of affairs will explain your financial position and demonstrates that you are insolvent. It will also show what would happen if you went into liquidation and what the outcome would be if the PVA were approved and successful. The document will describe how long the deal is for. Typically most PVA's last between three and five years. The document will describe how much the partnership will pay from the business in the months and years ahead to its creditors. After the document has been completed and the affidavit sworn it can be filed at court. The purposes of this are to ensure that the document that is filed at court is the same that is circulated to all creditors and to apply for a moratorium (called an interim order) to protect the debtor in the period between the application to court and the date of the creditors meeting. Once this process has been completed a creditors meeting is called.
Creditors meetings and voting After the proposal has been filed and posted to every known creditor, a creditor's meeting is called. There is a statutory minimum period of 14 days before this creditors meeting can be held from the date of the receipt of the document by the creditors. This is to allow adequate time for them to consider the documents contents and to make objections or modifications.

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Partnership Liquidation
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