"There was a lot of other stressful issues going on in my life at the time of the bankruptcy and I have to say without Stuart’s advice and help I don’t think I would have gotten through it as well as I have. I cannot thank Oakdale enough. I would recommend them very highly."

BUSINESS INDIVIDUALS

How to Negotiate a Partnership Voluntary Arrangement (PVA)?

  • What is it?

    A Partnership Voluntary Arrangement (PVA) is a legally binding arrangement where a business trading as a partnership is afforded time (usually five years) to pay back a proportion of its debts at an affordable monthly amount each month.

  • How does it work?

    A realistic repayment proposal is drawn up by the debtor (the business) usually with the help of an insolvency specialist which is then presented to debtor’s creditors. It is then up to them to decide whether to accept the proposal or not. For the PVA to be accepted, 75% of creditors, in monetary terms, who vote, need to be in favour. If it is accepted then the debtor needs to make the agreed payments every month and adhere to other terms and conditions of the proposal.

  • Pros for business and the partners
    • It can help avoid the partnership being wound up by creditors
    • It can help avoid the partners being made personally bankrupt as they are personally liable for any unpaid business debts
    • A proportion of debt is usually written off
    • It can help achieve business continuity
  • Pros for Creditors
    • They receive a proportion of what they owed
    • They retain a customer if they so wish to continue to deal with the business
  • Cons for business and partners
    • It is a long drawn out process during which certain onerous restrictions are placed on both the business and the partners
    • If the business’s circumstances improve, i.e. profits are higher than anticipated, then contributions into the PVA will be increased but not necessarily by the full amount of the increase in profits
    • If circumstances worsen and payments are not maintained, then the PVA will fail and the insolvency practitioner supervising the arrangement will often be duty bound to petition for the partners to be made bankrupt
  • Cons for Creditors
    • Most of the time they have to write off some of their debt
    • They receive their money over a long period of time
  • Is it for me?

    If you are looking to continue trading your business as a partnership even though it is insolvent, then a PVA is the only way to go about achieving that. As long as you can demonstrate the business is going to become profitable again and remain viable, then it could well be for you. It is, however, worth noting that you could potentially continue trading your business and limit future personal liability by setting up a limited company.