5 Tips to Avoid Bankruptcy in Business
5 tips to avoid bankruptcy in business
As the recession deepens and the end of the furlough scheme looms, Ann Summers becomes the latest retailer to threaten landlords with CVA unless shop rents are renegotiated
Some landlords are “burying their heads in the sand”, says Ann Summers boss Jacqueline Gold.
Ann Summers is a hugely successful lingerie and sex toy chain, which has brought the industry from the backstreets into mainstream retailing in the high street. They famously selling millions of pounds worth of products through ‘party plan’ selling in customers houses.
Gold warned that unless landlords come to the table, they would ask to restructure its rent costs through a Company Voluntary Arrangement (CVA), which would wipe out much of its debt and liabilities such as lease agreements.
A CVA is a legally enforceable rescue deal that enables limited companies to close unprofitable parts of the business, such as low performing stores, reduce their rent on others without going into bankruptcy or liquidation which would wind up the business.
Jacqueline Gold said landlords needed to recognise things had changed.
“Ultimately no retailer can afford to run stores unprofitably, and with business rates set to return next spring, the challenge of property costs is going to become even more pressing than ever,” she said.
Writing in Retail Week, Ms Gold said the threat of a CVA was “no idle threat”.
In my experience, commercial landlords can be ruthless especially to smaller tenants with no clout. I have seen many small business owners made bankrupt by landlords over unpaid rent on a binding lease agreement.
5 tips to avoid bankruptcy
- Avoid signing long leases especially in your own name.
- Avoid signing personal guarantees.
- Limit your personal liabilities and debts.
- Incorporate your business
- Take out liability insurance
Individuals suffer most from debts and can lose everything including their home.
Jacqueline Gold or Richard Branson will not lose their home of one of their companies fails because they are not sole traders or in a partnership.
The above information should not be treated as personal financial advice, and you should always take advice from your own advisers, accountants and lawyers who know your personal circumstances.
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Millions of people face a bleak future post-Coronavirus lockdown, as businesses disappear and the job furlough scheme eventually comes to an end. However, life doesn’t have to end because of lockdown! You can join thousands of ordinary people who have increased their income and added streams of new income during this period.
Are you ready to adapt to the new economic model?
As lockdown restrictions around the world are being eased, the economic model has subtly changed forever. How will you adapt to this new way of working and running a business, what obstacles and opportunities lies ahead? Will you be a participant or spectator in this revolution?
By Charles Kelly, Wealth Mentor, Property Investor, Author of Yes, Money Can Buy You Happiness and creator of Money Tips Podcast.
There are more examples and practical steps to getting rich and being happy in my book, Yes, money can buy happiness, I cover the 3 R’s of Money Management, the Money B.E.L.I.E.F System and much more. Check it out on Amazon http://bit.ly/2MoneyBook.
If you’d like further information on wealth mentoring and coaching, how to survive the crisis and even quit the rat race, email me at Charles@CharlesKelly.net or send me a message through Facebook or my Money Tips Daily community. See more articles at www.moneytipsdaily.com