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Unincorporated Business
Perhaps entrepreneurship in its rawest form! The benefits of limited financial disclosure are offset by the loss of the “veil of incorporation”.
Individuals
Individuals trading through this style expose their personal assets to their business creditors. Individuals operating in the “trading as” style are as exposed as those trading in their own name.
Insolvency options for individuals remain limited to IVA’s (Individual Voluntary Arrangements) and Bankruptcy.
The IVA structure originated from the Insolvency Act of 1986 and was conceived to help trading individuals restructure their debts and remain trading.
There are two key elements to an IVA, debt deferral and debt reduction. They can be used in combination or separately.
Each IVA for a trading individual is unique in its structure and it’s this flexibility in structure that lends the IVA so well to this style of business.
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Creditors will need to agree to any IVA and as such any proposed IVA structure will need to be supported with financial forecasts.
Partnerships
This relates to unincorporated partnerships.
Individuals trading through this style expose their personal assets to their business creditors. Individuals operating in the partnership style have the added benefits of the joint and several liability with their partners.
Their options are the same as individuals along with some specific additional options which allow the partnerships as a whole to offer to settle its liabilities from within its own assets.
Specific partnership options include a Partnership Voluntary Arrangement, a Partnership Administration Order and the option to wind the Partnership up as an unregistered company.
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