Clothes Manufacturing Partnership

Two brothers set up a clothing manufacturing business 35 years ago. The business was very successful, but as time went on high street fashion boomed and the smaller retail shops became less profitable. This in turn affected the partnership business as they provided clothing items to the smaller chains of retailers and built up debt quickly over a period of 6 years.

Once instructed, we done an analysis of the business and put it into administration having obtained an administration order from the court to protect it from extremely hostile creditors.

During the administration period, the administrator took control of business explained the pros and cons of the available options the partners had. It was pointless entering into a PVA as the amount of debt owed to creditors was over £400,000.00 and there was no prospect of repaying them at a rate they wd be agreeable to. Many of the retail outlets that the manufacturing business was providing to were struggling too and contracts were being lost to supply to them.

The Administrator knew the copy had to be liquidated. He sold the assets of the business and distributed the proceeds to the creditors of the partnership in order of priority.

Book Shop

A partnership set up in 2000 selling a wide range of books found the business to be extremely successful after the first 2 years of trading. However in 2007 the partnership started to struggle with a major reduction in customers, and major build up of debts, in particular tax debts owed to HMRC.

The business was unable to pay creditors, and struggling to pay their staff, leaving the partners without any salary.

Upon instructing us for tax help, our assessment illustrated that the situation was far worse than just tax debt, and getting an arrangement with HMRC for the partnership would not alleviate the underlying problems.

Our recommended IP was instructed and identified a number of problems with the partnership whilst having the firm belief that the business was viable. The partnership was put into administration to protect the business from any legal action from their creditors. The IP was the appointed Administrator and in the administration period he took full control he business. He restructured the business and reduced the staff as well as excluding all unprofitable business.

He then set up a PVA with the partners and the creditors which were affordable to the business and acceptable to the creditors. After the administration period, the partners were able to continue running their business with a successful structure in place to increase turnover.

Health Club

A health club and gym set up by a married couple over 20 years ago was extremely successful. The business was very profitable and the couple were able to afford a luxury lifestyle! However, the down fall was that they failed to pay any tax for a period of 3 years, which continued to incur interest and penalties.

When the partners approached us, they had individual tax debts of over £500,000.00 each and the business tax debt of over £800,000.00. The partners knew that there was no real prospect in repaying nearly £2 million in tax and that HMRC would make them bankrupt.

Before the creditors were able to take any action, our recommended IP put the company into administration to protect the business from any legal action. A third party saw the potential of the business and bought the business and all the assets while retaining the partners to continue running the business.

The partners were made bankrupt but were able retain most their personal assets, as well as continuing to manage the business they had originally set up.