INSOLVENCY – ‘DO NOT PANIC’ SAYS LEADING INSOLVENCY EXPERT

The financial ‘fall out’ from the most devastating losses in the UK and Ireland for decades has created an atmosphere of great uncertainty for business people, individuals and financial institutions.

The reduction in private sector growth in Northern Ireland for the 5th successive month makes Peter Robinson’s aspiration of a politically driven stimulated growth seem even more distant especially when the world outlook, and especially the US downturn, has all economists agreeing that the future is not rosy.

Despite this, says Sean Cavanagh, a leading Insolvency Practitioner in Cavanagh Kelly Insolvency Practitioners and Business Advisors in Dungannon, it is crucial to be aware that there can be a solution to business and cash flow problems and the earlier the advice is sought, the better the solution.

“When financial problems arise, it is often very difficult to see beyond bankruptcy or winding up” says Mr Cavanagh “It is important to be aware that help is at hand – always have the courage to know that there is life after debt”.

Some of the potential solutions are;

INDIVIDUAL VOLUNTARY ARRANGEMENT (IVA)

These are schemes whereby an insolvency practitioner prepares a proposal to be put to creditors so that bankruptcy can be avoided.  Indeed, even in circumstances where a bankruptcy order has been made it is still possible to propose an IVA and have the bankruptcy annulled.  This can be used for personal debts or for a business operated by an individual or partnership.

COMPANY VOLUNTARY ARRANGEMENT (CVA)

This is broadly similar to an IVA and is for businesses operated via a Limited Company (or in some cases a partnership).  Many businesses have already been saved by the use of these rescue mechanisms and Government is supportive of their continuation.

NEW PROPOSALS FOR SIMPLIFIED IVA’S

The Insolvency Service has recently brought together proposals for the operation of ‘consumer-based’ IVA’s and in particular their acceptance amongst the banking and credit card companies.  This is expected to be in place in mid 2008 and is further evidence of government support for saving people from bankruptcy.

DEBT MANAGEMENT PLANS – AVOID THEM WHERE POSSIBLE

Sadly many people in financial difficulty are encouraged to enter into a ‘debt management plan’ often lasting for up to 20 years.  An IVA is a much better option, lasts for only up to 5 years, and is regulated by statute.  Cavanagh Kelly can help avoid these plans.

So, says Mr Cavanagh, the key message is “DO NOT PANIC” – there can be a way out, and take heart – these mechanisms are well tried and tested.

Cavanagh Kelly Business Advisors and Licensed Insolvency Practitioners have a team of dedicated specialists available at your fingertips – e-mail recovery@cavanaghkelly.com or Telephone 028 87721194.