Two friends fell out. Money had been loaned and their joint business venture had failed with losses suffered by the lender only. Where once there had been friendship, hope and enthusiasm there was now only bitterness and resentment. Demand for repayment of the loan was made and bankruptcy soon followed.
BRI’s Peter Windatt was appointed trustee in bankruptcy and, following investigations into the estate, various transactions were pursued in order to recover funds for the benefit of the former friend, the only creditor.
Offers in settlement were made by the debtor’s family, but in the creditors’ eyes, these were insufficient. The creditor was not being punitive, the sum required was significantly above what was on offer, after all relevant costs. What to do?
As there was only one creditor, BRI were able to devise a cunning plan. Rather than pay funds through the bankruptcy estate, incurring an extra £25k of fees (a percentage of realisations to be paid to the Secretary of State), they proposed that the debtor’s family instead purchase the creditor’s debt, at a discount, subject to confirmation that the debt then be written off.
It had been agreed that the costs of the bankruptcy be paid by the petitioning creditor out of the funds he received. And now, as there are no creditors, the debtor can also seek an annulment of his bankruptcy if he wishes (granted where costs are paid and creditors satisfied).
Result; satisfaction on all sides, a win-win all round.
If you’d like some advice on how to get a win-win with a tough business situation, get in touch with Peter Windatt, Director, BRI Business Recovery and Insolvency.
Guest blog from our partners at BRI Business Recovery and Insolvency.