Business Debt Service helps café owner deal with unaffordable debt after Covid closes business
A café owner who closed her business due to the impact of the pandemic has praised the Business Debt Service (BDS) for guiding her through the process of dealing with her debt and winding up the business.
The client approached the Business Debt helpline after seeing the debt advice services advertised on the Advice NI website. She was a self-employed sole trader who ran a successful café for three years.
However, the business was to cease trading due to low profit margins compounded by the Covid-19 impact. The client was going to be left with residual business debt of £85,000 of which Land & Property Services (LPS) was owed £17,000 and the landlord due £50,000 for unpaid business rent.
The client, a homeowner with little equity, was due to start a new job as a full-time employee. The client wanted to know their options, and preferably come to some arrangement to repay the business debt. The Business Debt adviser gathered full financial details and determined there was some monthly affordability the client could use to offer as repayment to creditors through an Individual Voluntary Arrangement. However, her new employment was delayed and reduced to part-time work due to the lockdown and social distancing restrictions caused by Covid 19. The client was then able to offer an alternative proposal of a £12,000 lump sum sourced from family members. Unfortunately, this was rejected by the majority creditor. The adviser referred the client to the Insolvency Practitioner and after further discussions, the client is now considering bankruptcy as her income has reduced and the third party lump sum will not be available.
The client says she is “extremely appreciative” of the assistance of the Business Debt adviser who talked her through the details surrounding the closure of business, collated all financial information and with the referral and the opportunity to work with Insolvency Practitioner in coming to an appropriate proposal with creditors.
However, the business was to cease trading due to low profit margins compounded by the Covid-19 impact. The client was going to be left with residual business debt of £85,000 of which Land & Property Services (LPS) was owed £17,000 and the landlord due £50,000 for unpaid business rent.
The client, a homeowner with little equity, was due to start a new job as a full-time employee. The client wanted to know their options, and preferably come to some arrangement to repay the business debt. The Business Debt adviser gathered full financial details and determined there was some monthly affordability the client could use to offer as repayment to creditors through an Individual Voluntary Arrangement. However, her new employment was delayed and reduced to part-time work due to the lockdown and social distancing restrictions caused by Covid 19. The client was then able to offer an alternative proposal of a £12,000 lump sum sourced from family members. Unfortunately, this was rejected by the majority creditor. The adviser referred the client to the Insolvency Practitioner and after further discussions, the client is now considering bankruptcy as her income has reduced and the third party lump sum will not be available.
The client says she is “extremely appreciative” of the assistance of the Business Debt adviser who talked her through the details surrounding the closure of business, collated all financial information and with the referral and the opportunity to work with Insolvency Practitioner in coming to an appropriate proposal with creditors.