# Need advice, business going under:(



## Sinking (6 May 2010)

Hello All,

  Here’s my story and I’m just looking for a bit of guidance, my business is sinking and I think I’m just prolonging the inevitable but to be honest if I could even get there in one piece I’d be happy. I own a small business in a small town, and during the years up to 08 we were doing alright, not making much but we had a few employees and we were able to pay all our suppliers and bills on time, but then in 08 there was a big slowdown but we though it was just things levelling off and continued as normal absorbing any losses then in 09 things got worse again. We made a lot of cutbacks and regrettably now we pumped a lot of money via loans and an overdraft into the business which we able to pay back at the time but we just needed the business to pick up a bit as we (my wife and my self ) have little to fall back on if our business fails.

  Now here I am in May and to be honest life has been pure hell for the last year and a half, I haven’t slept much and dreams have been turned into nightmares about whose going to ring looking for money tomorrow. It’s been a real grind getting up for work everyday 6 or 7 days a week knowing there’s not enough money coming through the door to justify been open but I can’t really afford to close because of my borrowings. 

  I owe the bank €10,000 overdraft and about €13,000 in a short term loan my account is nearly always at the 10,000 mark and there is no leeway I had a cheque returned yesterday because it was €4 over my limit even though I made a lodgement the next day of €1,100. I have personal loans of about €20,000 all down to the business just to keep things afloat (or prolong the agony) all of these are personal guarantees. Then I owe suppliers about €40,000. I have stock with a retail value of about €70,000 (cost €40,000) and assets and equipment of about €10,000 but at the moment sales are so low at the moment I barely have enough to cover the ESB bill and make a few repayments and the VAT cheque every 2 months is a nightmare. Even if things picked up a few thousand it would make a great difference to me, but I’m saying that for the last year and a half and no sign of improvement.

  Things I feel are going to come to a head soon my company accounts need to be filed by the end of this month and as I still owe my accountant money from last year which I just can’t gather together to pay him. I do my own books and know there’s nothing due in corporation tax but maybe a little in vat. I’ve talked to liquidators but they would cost between €6,000 and €10,000 which I haven’t got but even if that happens I still owe my private borrowings but then with absolutely no way of paying them back. I’ve tried looking for a job but with little success even though I have qualifications and plenty of experience in business.

  At this stage life is just hell and there’s been plenty of tears over this but if anyone has any advice as the best way to steer our way out of this, anything would be appreciated as we just can’t see any hope with interest rates going up and the next budget looking to suck more money from people we just can’t see the business improving no matter what type of sales we have or amount of advertising we use.

  Thanks


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## tenchi-fan (6 May 2010)

Speak to the county enterprise board, mabs, and anyone else who is willing to give you free advice and support. You need a professional opinion on whether your business can be salvaged. The first thing you need to do is stop personally guaranteeing loans and taking out personal loans. 
The whole idea of limited liability is that you won't go down with you business.. yet in the last while you have accumulated pretty substantial personal debt which, without an income, you won't be able to pay off.


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## Joe_90 (6 May 2010)

Agree with tenchi-fan but the banks will not give loans to companies without a personal guarantee.  
What are your debtors? Do you own or rent the property? Can you get a rent reduction or go interest only. Have you considered a scheme of arrangement with creditors?  
Bank o/d of 10k and 13K loan = 23K
Personal loan 20K
Ask the supplier if they will take the stock back but you will still be left with 43K


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## Brendan Burgess (6 May 2010)

Hi Sinking

The first thing you have to do is to look at your business with a cold, calculating independent eye. 

Is it generating a profit before the salaries you are paying to your wife and yourself? I have been told by people that they were losing money, when in fact the company was making €60,000 a year, but the directors were paying themselves €100,000. They thought that they were losing €40,000, but in fact they would have been €60,000 worse off by closing. 

Are you taking out a salary? If you are borrowing money to take out a salary, it makes no sense as you will be paying tax on borrowed money. 

If ,as I suspect, you are not taking out a salary, then the business is losing money, and you should cease trading immediately. You don't need a liquidator at this stage. Just cease trading. As Joe said, give the stock back to the creditors to reduce your liability. 

Once you close, there will be a sudden reduction in pressure. Most creditors will actually be very understanding, although a few will be very upset. Set out a schedule of your assets and liabilities and you can try to get a Section 279 restructuring. It will be difficult to do, but if you can achieve it, you will end up with a company with no assets and no liabilities and then you can go for voluntary strikeoff. 

once you close the business you can go to the Social Welfare Officer to get social welfare assistance. You didn't mention your home or mortgage. If you have a mortgage, you should be talking to your bank about rescheduling. 

Brendan


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## number7 (7 May 2010)

I would be interested in the status of your premises, is it leased or owned. If leased what are the terms and how long to run, if owned is it owned privately or by the company.

What line of business are you in and has the business any value to someone else in a similar line of work that might be interested in buying as a going (or part going) concern, again mainly from a premisies point of view.

Also your personal circumstances, ie home owner, value mortgage, car loans etc as once you signed the PG'S these become relevent to the situation.

There is always an opertunity to make a new begining, sometimes hard to see it but its there, so dont despair. Action is the enemy of worry and anxiety.


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## Sinking (7 May 2010)

Thanks for the replys, 

  Actually my situation on paper would of being a lot worse last year I would of owed suppliers about €90,000 but had more cash flow than so was able to bring this figure down to the €40,000 it is now, but the difference this year is there is very little cash flow just enough to pay bills. I haven’t defaulted on any loans missed a couple of payments on the date due but was able to pay them a couple of days later. I won’t be getting any more loans to prop up the business. My rent is nominal now because I’ve be able to reduce it by 50% in the last year until things pick up.

  The section 279 restructuring definitely looks like an option to explore and would suit the suppliers better also. The most I owe any supplier is €14,000 and they know as well as I know its pointless sending me solicitor’s letters as they can’t get blood out of a stone. I am paying them but it’s only small amounts compared to what I owe.

  All my loans are short term and would be paid in the next year and ½ if I can keep making repayments that’s why if I cease trading I won’t be able to repay those debts as social will be of no assistance to a self employed person so for every week I’m open I’m paying off some of my debt. The business is in flooring and furniture and traditionally the second half of the year is busier than the first.

  I am a home owner with a mortgage, no car loans and personal loans are associated to the business.


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## struggling1 (13 Sep 2011)

Hi sinking, I am in a similar situation if not worse, and would appreciate any legal advice off anyone:
Hi, I own a large country pub, and a few years ago just as the recession hit, my husband took out loans on the pub €400,000 of which I knew about and signed for, other loans however I did not sign for for other large amounts. The business is in both our names, surely the bank should have never legally been able to provide these loans knowing of the times Ireland was entering without both our signatures? Can legal action be taken against the bank?


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