Your tools of trade are excluded from bankruptcy such as the tools used by plumbers and joiners. Other assets are not excluded such as stock, debtors (monies owed to you), and vehicles. If your business has value, this would also be sold if it would generate monies to be paid to your creditors.
You have to trade in your own name unless you tell the parties you are trading with that are bankrupt. This only applies whilst you are bankrupt which normally lasts 12 months.
Trading in Partnership
The effect on a partnership will depend on the terms of the partnership. If there is no agreement, Bankruptcy will mean the partnership has to cease trading and will automatically face dissolution. Your Trustee will take over your share of the partnership and the assets of the partnership will have to be established and realised.
If there is a partnership agreement, this could state that you are removed as a partner if you are made Bankrupt. The partnership will still need to liaise with your Trustee about how any share you have in the partnership is turned into cash for your creditors.
Director and Shareholder of a limited company or an LLP
Whilst you are Bankrupt, which is normally for 1 year (unless your discharge is suspended) you cannot be involved in the promotion, formation or management of a limited company or a limited liability partnership.
Getting someone else to front your company, whilst you are actually running it “behind the scenes” is an offence and it is very easy to check this out. People frequently whistle blow and notify your Trustee and apart from facing possible action as you are breaking the law, you could find that your Trustee applies for your discharge to be suspended indefinitely.
Your share in the limited company is an asset and your Trustee will investigate to see if your shares can be sold to provide a return to your creditors. It will be possible for a new shareholder to purchase your shares as long as the Trustee considers the value they are offering is fair.
The Business Debt Advisor specialises in helping self employed individuals. A detailed review by our team will help you decide on best way to protect your business but allow you to offer an appropriate deal to your creditors.
There are sources of free debt advice and services. You can find out more by contacting the Money Advice Service or National Debtline on:
Money Advice Service 0300 500 5000 (8-8 Monday to Friday, 9-1 on Saturday). Alternatively you can visit their website.
National Debtline – 0808 808 4000 (9-8pm Monday to Friday, 9.30-1 on Saturday). Alternatively you can visit their website.