Who can benefit from this procedure?
PVAs are applicable to partnerships which the courts in England and Wales have jurisdiction to wind up. The procedure is used mainly for partnerships with a significant number of members who wish to avoid the consequences of bankruptcy as well as excluding personal assets from any arrangement.
Does a PVA affect the credit rating of the partnership?
Yes. You will need to be prudent with your cashflow budgets as your suppliers may not be prepared to extend credit to the company – particularly in the early days of the PVA. Within particular industries it can be difficult to trade within a PVA for this reason.
How do you decide on the offer to creditors'?
This is based on the budgets for the company and what the company can afford to pay.
Who prepares the budgets for the company?
If you have an 'in house' accountant or external accountant we will liaise with them and yourselves. Otherwise, we have a team of skilled accountants who will discuss carefully with you the future plan for the business and produce the information necessary. Time is of the essence to prepare this information to assess the viability of the future trade.
Who is in control of the company during the PVA?
The partners remain in control of the company. As Supervisor to the PVA our role would be to oversee that the terms of the PVA are being complied with.
What would happen if the company were unable to comply with the terms of the PVA?
In the first instance you should make contact with us at the earliest opportunity to fully discuss the problems. We would work with you, and your accountants to overcome any difficulties. If the difficulties continued the viability of the PVA would become an issue. Ultimately, it is usually a term of the PVA that the Supervisor issues a winding up petition against the company upon the failure of the PVA.
Who is the Nominee and the Supervisor?
Only a Licenced Insolvency Practitioner (IP) can act for a partnership who wish to enter a PVA. Up to the date of the Creditors' meeting (and the formal approval of the PVA) the IP is called the Nominee and after the Creditors' meeting (assuming the PVA is approved) is called the Supervisor.
What about the employees of the company?
As part of the business plan for the company to return to profitability there may be redundancies of your employees. Any employee entitlements would be paid by the Redundancy Payments Service (a Government department) and these payments would rank as a creditor who would receive dividend payments under the terms of the PVA.
Does the Supervisor do a directors' conduct report to the BIS (Department for Business Innovation & Skills) under a PVA?
No. Unlike, a Partnership compulsory winding up order or bankruptcy which all require such a report to be completed.
How do your fees work in a PVA?
There is a separate Nominees fee and Supervisors fee. The Nominees' fee is agreed with the partners when you instruct us to proceed. The level of this fee depends on the work involved and can be as little as £2500.
The Supervisor's fees are usually fixed by the creditors' and are typically £3000 to £4000 each year of the PVA.
Who would speak to our bankers and major suppliers and HMRC?
We would explain the details and the advantages of supporting the PVA and would do this as soon as practically possible. To have the support of your bank and major creditors' is vital to achieve success of the PVA.
Other Partnership Solutions
A partnership, because of its nature is probably the most complex business arrangement available. In this situation our experience in identifying the right solution for you is critical.
With a smaller partnership it may be appropriate to link together a number of simultaneous (or interlocking) Individual Voluntary Arrangement (IVA's) to protect the partnership and the individual partners.
It may also be appropriate to also have a partnership voluntary arrangement – but this depends on the circumstances.
This process could be used to continue to trade the business or bring it to a conclusion.
Winding Up of the Partnership
A partnership winding up is the process to wind up your partnership (or deal with the closure of it) if the business is insolvent – or in other words the value of the assets of the business are not enough to be able to clear all of the debts.
The partners can petition (through the court) to wind up the partnership. This can be done concurrently with individual bankruptcy petitions against the individual partners – but these do not have to be issued at the same time.