I am a sole trader – do I qualify for an IVA?

Absolutely. In fact, many sole traders find that if they are confident of the future profitability of their business, an IVA secures their business survival by satisfying creditors who would otherwise call upon their personal assets. It also enables the business to continue trading, which would be impossible in the case of bankruptcy.

If you are a sole trader you can still qualify for an Individual Voluntary Arrangement but it will have an impact on your business. As ever, it will be up to your creditors to decide whether or not they are in agreement with your IVA proposal. They’ll carefully examine your business’ finances and it’s possible that they would rather you filed for bankruptcy. If this is the case, your business assets could be liquidated in service of your outstanding debt. This isn’t necessarily of any benefit to your creditors though; it could mean that they receive a much smaller percentage of the original debt.

You are free to continue trading once you have put your IVA proposal to your creditors but the degree to which this is financially practical is best decided with the help of your Insolvency Practitioner (IP). Your IP will help you to put together your IVA proposal, which should contain a detailed breakdown of your business’ financials and essentially prove that it’s still a viable business. In order to do so, you’ll need to clearly demonstrate the successful resolution of any cash flow problems.

Naturally, it’s in your creditors’ best interest that you to keep trading as you’ll be generating income that will go towards the service of your outstanding debt. Being able to liquidate some of your business assets can release additional equity that could be immensely valuable in helping you to maintain your IVA repayments. As it’s in everyone’s best interest that you successfully complete the IVA term, there is no reason that it will cost you a successful business. On the other hand, if your debt problems are the result of a flawed business model, having a financial expert scrutinise your books can help you to find the right solution.